It’s very understandable that, if you’re been even casually observing Canada’s housing, construction, real-estate, mortgages, etc., sectors, you might have a gloomy outlook. Inflation is at historical highs and, if kept uncheck, it might erode everyone’s ability to buy just about anything, including property financed via mortgage.

However, according to data and analysis recently provided by Canada Mortgage and Housing Corporation (CMHC), things might not be all that bad.

Housing is still resilient

Canada housing starts steady

First, despite inflation, Canadian housing starts are trending higher in June, reaching 258,295 units, compared to 252,444 units in May. And, although the monthly seasonally-adjusted annual rates (SAAR) of housing starts was down, it’s still remains at historical highs and well above the 200,000 units level seen since the start of the pandemic in 2020.

In addition, according to analysis provided by the CMHC, although inflation will hit the housing market, which will experience a downturn by 2023, mostly the result of inflation and its broader effects on the economy, housing levels will still be historically strong. Also, although housing prices have come down from the insanity of the last two years, there will still be upwards pressures on prices, stemming in part from the continuing growth in immigration levels.

There is light at the end of the tunnel

And, according to the CMHC, even if the worst of scenarios transpires in terms of inflation and economic growth, all the fundamentals still remain relatively sound — until 2024, when everything is expected to come back to normal again, including interest and mortgage rates.

Whenever someone tries to analyze a financial market, one should try to do so from a long-term perspective and, in the process, try to discern some trends. And, if there’s been one long trend in Canada’s housing and construction sectors, it’s that they’ve outperformed expectations all along. Going back to the recession of 2008-2009, everyone was bemoaning the unusual decline in Canada’s housing sector. Yet, that recession was hardly over when the housing market not only started to bounce back strongly, but hasn’t looked back since — despite all the predictions of bursting bubbles and corrections. Even a pandemic and inflation haven’t hit the housing market as hard as one would think, which means there’s reason for continuing optimism, despite all the gloom in the news today.

ASCEND MIC is a mortgage investment corporation, with offices in Toronto and Richmond Hill, that specializes in various aspects of mortgage investing, lending, administration and more.