Desjardins Housing Outlook: Don’t Expect Affordability to Be Restored This Year or Next

Despite a late‑2023 housing market uptick, our updated forecast still sees home sales and prices softening somewhat this spring. This reflects our expectation that still-high interest rates and economic weakness will weigh down homebuying activity.

We also still think that high rates, elevated building costs and construction sector labour shortages will push homebuilding below 2023 levels this year.

Once the Bank of Canada reduces interest rates towards the middle of the year, we should see a broad-based rebound in sales and prices later in 2024. We expect the strongest of those gains to come in Ontario and BC—where buying tends to be most sensitive to interest rate movements—following tougher first-half economic conditions.

The key takeaway from this report, however, is that we do not foresee overall homeownership affordability returning to pre‑pandemic levels within the next two years. That result holds up even in the event of a more severe recession than we assume in our base case forecast, where interest rates come down more quickly.