CMHC Acknowledges Its Bad Market Forecast

A closer look at some surprising real estate stories this week.

BNN's Greg Bonnel talks to John Pasalis, Move Smartly lead contributor and Realosophy Realty President, about a range of topics:

  • CMHC Evan Siddall's apology 

Siddall apology Twitter

Evan Siddall, President of the Canadian Mortgage and Housing Corporation (CMHC), recently tweeted an apology for CMHC's prediction that home prices would fall by as much as 18% from pre-pandemic levels by the end of last yearas a foregone conclusion. 

John feels nobody could have predicted what the market actually ending up doing following the onset of Covid-19, with home prices now rising rapidly. "What we're seeing today are behavioural factors driving demand in housing, not so much macroeconomic factors," he says.

  • Exuberance in the market

John discusses how exuberance has accelerated home prices, driven by optimistic home buyers and increased speculation over the past few months. 

  • How contradicting policy makers might be contributing to this exuberance

While some authorities like CMHC have been cautious, the Bank of Canada is optimistic about prices, motivating buyers to get into the market now, pushing prices even higher, John notes.

  • Is tight housing supply a factor?

Not really. Since June, new listings have actually been up 30% over the previous year. Yet inventory supply levels remain low because sales are up 50% over last year. 

When there is a demand shock, like the one we're currently experiencing, the housing market can never respond fast enough with new supply, suggests John. Once this demand shock is behind us, the market should be more balanced. 

  • Rising mortgage rates

John feels the impact of rising rates is slight in the short term. Most people renewing mortgages today have rates well above 2%. "It will take some demand out of the market but won't impact existing homeowners or homeowners who recently bought," he explains. 

Click on the video above to watch the full interview.

John Pasalis is President of Realosophy Realty, a Toronto real estate brokerage which uses data analysis to advise residential real estate buyers, sellers and investors.

A specialist in real estate data analysis, John’s research focuses on unlocking micro trends in the Greater Toronto Area real estate market. His research has been utilized by the Bank of Canada, the Canadian Mortgage and Housing Corporation (CMHC) and the International Monetary Fund (IMF).

Follow John on Twitter @johnpasalis

Email John

Market     |     Video     |     In the News     |    

Toronto’s most authoritative real estate insights, delivered right to your inbox.