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Economic Viewpoint

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

February 6, 2024
Marc Desormeaux
Principal Economist

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.

NOTE TO READERS: The letters k, M and B are used in texts, graphs and tables to refer to thousands, millions and billions respectively. IMPORTANT: This document is based on public information and may under no circumstances be used or construed as a commitment by Desjardins Group. While the information provided has been determined on the basis of data obtained from sources that are deemed to be reliable, Desjardins Group in no way warrants that the information is accurate or complete. The document is provided solely for information purposes and does not constitute an offer or solicitation for purchase or sale. Desjardins Group takes no responsibility for the consequences of any decision whatsoever made on the basis of the data contained herein and does not hereby undertake to provide any advice, notably in the area of investment services. Data on prices and margins is provided for information purposes and may be modified at any time based on such factors as market conditions. The past performances and projections expressed herein are no guarantee of future performance. Unless otherwise indicated, the opinions and forecasts contained herein are those of the document’s authors and do not represent the opinions of any other person or the official position of Desjardins Group.