Heather Scoffield is Executive Director of the Canadian Mortgage and Housing Corporation
If you haven’t bought a home yet this year, you’re going to feel it. Expect prices to fall,” Heather Scoffield, Executive Director of the Canadian Mortgage and Housing Corporation, said Wednesday.
There is going to be a sell-off in the housing market – lots of money, lots of houses. And it’s coming.
After a growing real estate market over the past few years, it’s going to be much quieter. Sales are down, mortgage rates have risen, but they are still low. And there will be more homes on the market.
“The trend that we’re seeing now is the market is becoming a little more balanced,” Scoffield told CNBC. “We’re not seeing the sharp increases that we’ve seen in Vancouver and Toronto, that really led to a lot of the hot markets.”
It’s going to be worse for young people looking to buy a home, according to Scoffield.
READ MORE: Canada’s housing market may be cooling, but not out
A recent study from the CMHC, a government body, found that by 2024 – 15 years from now – the likelihood of buying a house will decrease.
“Part of the cause of it, of course, will be affordability. But the other big thing is our mortgage policy. You know, we’ve been emphasizing the importance of a low interest rate environment.”
She added that the federal housing agency has been looking into other policies, such as renting, to alleviate the rising cost of housing.
READ MORE: A snapshot of Vancouver’s pricey housing market
Pricing out of the housing market
The slowing sales market is inevitable as the demographic shift continues. Canada has seen an aging of the population and the majority of all Canadians will be millennials by the mid-21st century.
In 2006, 57 per cent of Canadians were over 65 years old. By 2030, 76 per cent will be, according to the Conference Board of Canada. By 2050, 87 per cent will be.
READ MORE: Only a fraction of Vancouver residents own home despite big boom
But Scoffield said it would be impossible to sit in a “lucky city” for the rest of the retirement cycle, as so many baby boomers are looking to.
“So we’re going to have to think about retirement and affordability differently,” she said.
It has been estimated that government revenue will drop, from $314.5 billion in 2018 to $247.8 billion in 2040. Meanwhile, spending will reach $503.7 billion – a 57 per cent increase over the past four decades.
READ MORE: Canada is getting younger — but retiring at 58 is no longer a badge of honour
The federal government has been warning since 2009 of the need to trim spending. At the start of this year, the federal budget committee recommended spending cutbacks worth $20 billion over the next three years.
If you don’t live in Canada, you probably have heard the story of Celina Carrasco. She lives outside of Boston and she and her husband bought a home last year, just as the market was peaking.
READ MORE: In Canada’s overcrowded housing market, a Colombian immigrant dreams of owning a home
Carrasco told Global News that she and her husband saved so they can afford their mortgage payments and living expenses. Their financial stress, she said, is rising every day.
“Today I spent most of my money, some time I didn’t eat and I’m already planning my next spending for the next month. And I know that many people who have bought, especially those in Toronto, are in the same situation.”
She and other young homeowners are starting to leave Toronto after hearing reports of cost-of-living increases and rising prices.
“Like myself, many of us are in the middle of our lives, trying to find a good job and move our families and now everything is becoming more expensive than it should be,” Carrasco said.