Press review of early May

The projections from the latest Housing Market Outlook report from Canada Mortgage and Housing Corporation (CMHC) and the $5.8 million budget dedicated to the pressing needs of households in search of housing announced by the provincial government are the subject of this press review.

By Corinne Laberge

Housing Market Outlook Report published by CMHC

On April 27, CMHC released its annual Housing Market Outlook. This forecast report, which can be downloaded and viewed here, covers variables in the new, resale and rental markets across the country. 

Among the key highlights of the 2023 report, CMHC notes, "We expect housing prices and supply to decline in Canada from 2022 to 2023. Prices are expected to stop falling during 2023 and then increase over the remainder of the forecast period."

Followed in the second point by "According to our analysis, a sharp decline in housing starts is expected in 2023. Some recovery in activity is expected to occur beginning in the 2023 to 2024 period and thereafter." It further states that "Ontario, British Columbia and Quebec will experience large decreases in housing starts compared to other regions."

CMHC also states in the highlights section of its report that "Rental housing affordability is also expected to decline as demand exceeds supply, especially in Vancouver and Toronto."

This article from La Presse Canadienne relayed by Les Affaires entitled "House prices won't return to 2019 levels this year, says CMHC" looks at the Housing Market Outlook. In it, CMHC Chief Economist Bob Dugan reports: "A low supply of listings means that (house) prices should start to rise as sales pick up. In fact, we expect average prices to rise by about 7. 9% in Canada in 2024 and about 7.5% in 2025."

Regarding the decline in housing starts, Dugan warns that "If housing supply does not increase dramatically, affordability could continue to deteriorate in the years ahead."

In the article "Les loyers prêts à exploser" published in La Presse, André Dubuc begins by painting a picture of the situation in Montreal: "Resales, house prices, housing starts, vacancy rates for rental units, everything is going to drop in the Montreal region this year, except for rents, which will jump by 30% over the next three years."

The author underlines that the "imbalance is growing between demographic growth which feeds the demand for housing and a brutal drop in housing starts which limits the increase in supply". In concrete terms, "the average rent for a two-bedroom unit will rise from $1022 in 2022 to $1120 this year, a hefty 9.6% increase according to CMHC projections (...) There is no lull in sight. The average rent will continue to rise, reaching $1230 in 2024 and $1330 in 2025," he reports.

As for the vacancy rate, which is estimated at 3% in 2021, it will continue to fall. "The vacancy rate will drop from 2% in 2022 to 1.6% this year before stabilizing at 1.4% in 2024 and 2025," the Housing Market Outlook states. "These forecasts suggest that there will be some weeping and gnashing of teeth among tenants who will have to find housing in the Montreal region in the coming months," notes André Dubuc.

The senior specialist, Market Insights of the Montreal market at CMHC, Francis Cortellino, is notably quoted: "In the rental sector, we unfortunately anticipate a deterioration in affordability. This is not encouraging. As for new construction, we anticipate a significant slowdown in housing starts. Once again, there is nothing encouraging to close the gap in the lack of supply. Mr. Cortellino even adds that following the first quarter of this year, "the pace of new construction is below our worst-case scenario."

In summary: "In the worst-case scenario, CMHC was forecasting 18,000 starts in 2023. After the first three months of the year, the pace is more like 12,000. The pre-pandemic pace was 25,000 new units per year. To restore balance in the market, CMHC has calculated that the pace of housing starts must be doubled compared to that observed in recent years."

Quebec government announces concrete measures as July 1 approaches

This press release issued by the Société d'habitation du Québec on April 25 begins as follows: "Thanks to an investment of $5.8 million by the Government of Quebec to meet the pressing needs of households looking for housing as July 1 approaches, the housing offices and a large number of municipalities, together with the Société d'habitation du Québec (SHQ), will jointly deploy concrete measures to assist Quebecers."

We learn that the new Temporary Accommodation and Housing Search Assistance Program will have two components. Thus, "the government will subsidize housing offices who wish to offer housing search assistance services (SARL) on their territory in order to better serve the population looking for housing. Some 30 housing offices have already set up SARLs to support their citizens. In addition, the government will support municipalities that wish to help households on their territory by setting up measures such as temporary housing or storage of movable property," it says.

The Minister responsible for Housing, France-Élaine Duranceau, states, "Quebec households that are or will soon be looking for housing need to know that we are at their side. Once again this year, we will team up with the housing offices, the municipalities that wish to do more for their population and the entire network of partners so that each person who calls upon our services has a roof over their head."

In this text on the information platform Monquartier.quebec, Minister Duranceau speaks about the rent freeze, a solution advocated by the protesters on the occasion of the 11th Tenants' Day. "Freezing rents just means shoveling from the front, with a catch-up to be done sooner or later, because we need to maintain the units. At some point, it just doesn't make sense," she says. Adding that the rent registry is not an answer to the crisis either.

In closing, this article from La Presse "Resources for tenants looking for a new home" also discusses the measures announced. "In 2022, 9300 households used the services of an OMH to find housing. As the crisis is still in full swing, Quebec City expects this number to increase this year," it says.