Canadian Real Estate Prices Won’t Return to Peak Until 2029

The Canadian real estate market continues to face challenges, with property values expected to take until 2029 to recover their 2022 peak levels, according to a recent analysis by BMO Capital Markets.

While factors like cheaper credit and government interventions are supporting demand, the bank highlights that a once-in-a-generation combination of economic and demographic drivers is now behind us.

Canadian Real Estate Down 17% From Peak  

After a surge in home prices from 2020 to March 2022—driven by historically low interest rates and aggressive quantitative easing—prices plunged 19% in the following year as rates climbed. As of last month, values remained 17% below their peak, according to BMO.

Although interest rates are easing again, BMO does not foresee a repeat of the rapid price growth seen during the pandemic.

BMO acknowledges several factors contributing to market recovery, including falling interest rates, extended amortization periods, and federal measures to expand mortgage credit. However, even under optimistic assumptions, the bank projects a return to peak levels will take approximately seven years.

Historical Comparisons  

A seven-year recovery may sound lengthy but aligns with historical trends. For instance, the Vancouver housing market took nearly nine years to recover from its 1995 crash, while Ontario’s early 1990s market correction lasted 15 years, with inflation-adjusted recovery in Toronto taking an unprecedented 22 years.

Kavcic draws parallels between today’s market and the 1990s real estate bubble, noting similar overvaluations, investor-driven narratives, and demographic shifts.

Millennials, much like the Baby Boomers of the 1990s, are aging out of their peak home-buying years, and international migration—a key driver of demand—has started to slow.

Implications for Property Owners and Investors  

The real estate market's prolonged recovery timeline underscores the importance of proactive property management and long-term investment strategies. For property owners navigating this uncertain landscape, expert guidance can be a game-changer.

Royal York Property Management, with its industry-leading expertise, offers tailored solutions to help you maximize your property's potential. Whether you need assistance with tenant management, maintenance, or leasing, we’ve got you covered.

Source: Better Dwelling