IMPORTANT: Given current economic uncertainty, we are presenting 3 potential scenarios. We’ll reassess them as conditions evolve throughout the year.

Transcript

0:00:01

(Visual: Screen is divided into two sections featuring the host, Joelle Hamilton and the guest, Kevin Hughes talking. The sections separate to reveal the host asking a question to the guest in a back and forth montage of the discussion ahead.)

Joelle Hamilton: Are housing sales and housing prices expected to rebound over the forecasted period?

Kevin Hughes: Inflation has gone down and that has an impact on interest rates. It's a safe assumption to say that there is pent up demand.

Joelle: How are our mortgage rate trends expected to impact Canada's housing market?

Kevin: We're not looking at like a monumental change in the landscape.

Joelle: Is the rental market expected to ease?

Kevin: There is probably going to still be very intense demand for rental.

(Visual: Animated introduction featuring various shapes of houses and doors, as well as a search bar where the term "canada's housing market" is typed in.

(On-screen text: In-House, Canada's housing podcast)

0:00:29

Narrator: You're listening to "In-House", Canada's housing podcast, where we share the latest on Canada's housing market.

(Visual: Animated transition to a shot of host Joelle Hamilton speaking to the camera and sitting at a table on which microphones, water glasses and laptop computers have been placed. Guests Kevin Hughes is sitting opposite of Joelle at the table.)

0:00:47

Joelle Hamilton: Hello everyone and welcome back to In-House. I'm your host, Joelle Hamilton, and joining me in the studio today is Kevin Hughes, one of CHMC's Deputy Chief Economists. Welcome back, Kevin.

(On-screen text: Joelle Hamilton, Communications & Marketing — CMHC)

0:00:56

Kevin: Thank you.

(Visual: The camera cuts to a single-person shot of host Joelle.)

0:00:57

Joelle: Today we're going to be covering CMHC's 2025 housing market outlook, which forecasts everything from economic growth to house prices and even mortgage rates.

(Visual: The camera cuts back to a two-person shot of all participants.)

But before we dive into that, I want to let our viewers and listeners know that this podcast is being recorded on January 28th, about a week before it will go out on our streaming platforms.

(Visual: The camera cuts to a single-person shot of host Joelle.)

I want to start by talking about our economic growth and the key economic factors that are going to be shaping our forecast.

(On-screen text: Kevin Hughes, Deputy Chief Economist — CMHC)

(Visual: The camera cuts to a single-person shot of guest Kevin Hughes.)

0:01:33

Kevin: Economists usually look at a number of indicators, which we call the economy's vital signs. These include consumer spending, overall investment, government investment, government spending and external trade. The indicators are conditioned by many factors during the year that in the end gives us the country's GDP, or economic growth.

So, when we look at these factors, we see that inflation has definitely gone down, which has an impact on interest rates. Although people always think of current interest rates, we should remember that past interest rates affect today's decisions and even possibly the decisions we take in the next few years. It takes a while for these adjustments to actually happen. So interest rates are definitely one element. Population growth is still relatively robust despite lower government targets. It should go down, but it definitely still has an impact on things.

We also have the lurking trade dispute, which we'll most likely have to deal with this year. As you said, we're at the end of January now, and we're still under the CUSMA trade agreement. It might not happen; we'll have to see. But that was definitely a factor we had take into account when we looked at GDP growth for the next few years.

(Visual: The camera cuts to a single-person shot of host Joelle.)

0:03:12

Joelle: So our economic outlook contains three different scenarios, low-growth, medium-growth, and high-growth. Based on that economic growth and those forecasts, we predict housing prices and mortgage rates. Can you just give us a quick overview of each of those three scenarios?

(Visual: The camera cuts to a single-person shot of guest Kevin Hughes.)

0:03:34

Kevin: Yes. The three scenarios are overwhelmingly based on the range of tariff scenarios we may be facing, at least in the short run and we'll update that in the course of the year. The low growth scenario is based on 25% tariffs on all goods. However, we expect that those would be relatively short lived and that negotiations would follow. Nonetheless, they would cause a contraction of the Canadian economy this year, followed by medium growth, and then stronger growth in 2027. Medium growth would be the result of 25% tariffs on 10% of goods. Whereas in the high growth scenario, we're assuming little impact on trade and therefore a medium- to high-growth situation throughout the forecast period.

In the last two months, we've made a big effort to consult government agencies and trade experts to try and see if our range of scenarios covers what we could be up against. And I think we're quite comfortable right now that no matter what happens in the coming weeks, one of our scenarios will cover the situation.

(Visual: The camera cuts to a single-person shot of host Joelle.)

0:05:01

Joelle: We know interest rates started coming down last spring, and based on our forecast this year, we're saying that they are going to continue to decrease. Is there pent- up demand from people who decided not to buy and to wait for interest rates to come down? If so, how is that going to impact our housing supply?

(Visual: The camera cuts to a single-person shot of guest Kevin Hughes.)

0:05:23

Kevin: We can't estimate how many people are not buying right now without a survey to really measure it, but we assume that there is considerable amount of pent-up demand. When we look at the population pyramid, sales growth in the past years, plus inflation, I think it's a safe assumption that there is pent-up demand. And so that will have different impacts. For example, people who are renters right now because they couldn't afford to buy a home, may be moving toward home or condo ownership. Plus, there are people who want to move to a bigger, or even a smaller, home.

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So that will definitely have an effect, because of slightly more affordable conditions. There will be some of that this year and probably next year as well.

The resale market should be probably more of a target for these people than the new market because it's relatively affordable. As I mentioned before, the transition involving some renters becoming buyers did not occur as much in previous years.

(Visual: The camera cuts to a single-person shot of host Joelle.)