Pandemic housing market to stay hot in 2021, but economists expect a hangover later in the year

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Much is dependent on vaccine outcomes, interest rates and buyer psychology

Resales on an annualized basis will slow some by the end of 2021, RBC predicted, to somewhere closer to 515,000 units. After an 8.5-per-cent jump in the aggregate benchmark price for a home in 2020, the lender’s economists see 8.4-per-cent growth in a gradually softening 2021, to $669,000, “setting the stage for a more modest” 3.9-per-cent gain in 2022.

Capital Economics projects house price inflation will increase past 10 per cent in the first quarter of 2021 compared to a year earlier, driven by strong demand and low mortgage rates. However, the research firm sees home-price growth slowing to five per cent by the end of 2021, and to two per cent by the end of 2022.

“It’s been very strong, and that strength can’t be sustained forever,” Brown said. “So, the housing market will start to lose some momentum for that reason.” “Whether or not that rotation persists after the vaccine is widely administered is probably a question for the 2022 outlook, but we suspect core urban markets will ultimately find a solid footing again after further underperformance in the meantime,” they added in their Dec. 23 outlook.

 

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That’s fine with me, in smaller cities like mine within 2 hours of Toronto that will mean another 25 to 35 % increase in the value of my home this year just like last. If it goes to up 1 or 2% after that who cares. Tax free gains.

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