Fewer young homebuyers may dampen home prices: CCPA economist

David Macdonald, of the CCPA, told CRE that real estate appreciation needs to slow down, so that inflation and household incomes can catch up.

If that doesn’t happen, all it would take to collapse markets in cities, such as Vancouver, Edmonton, Calgary, Toronto and Montreal, is a one percentage point increase in long-term mortgage rates, he said.

 

So anything that slows the rate of appreciation, which was at 10% some years while inflation was just at 2%, is welcomed, he said.

Because first-time homebuyers make up such a large portion of the market, less demand in that sector could start what Macdonald called a much-needed change in the Canadian real estate market.

 

“It does hopefully lend to housing prices being flat for the next five or 10 years, which would take us out of this danger territory for much bigger housing price declines if we see mortgage rate increases.”

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