Canada Mortgage and Housing Corporation (CMHC) released their Second Quarter 2012 Canadian Housing Market Outlook on Thursday. The Canadian housing market is expected to remain strong over the remainder of 2012 and for all of 2013. This, in a nutshell, is the CMHC’s mid-term forecast for the housing market. Although there will always be pockets that stray from the norm, it’s largely expected that we’ll have a balanced market with growth in average MLS prices at the rate of inflation. It’s expected that the average price will be $372,700 in 2012 and $383,600 in 2013.
One of the main factors that CMHC took into account in crafting their forecast is mortgage rates. CMHC forecasts that mortgage rates will not rise until later in 2012 and even then, will remain low by historical standards. According to their most likely scenario, 5 year fixed posted mortgage rates will be between 5.0% and 5.40% by the end of 2012 and will only increase to between 5.10% and 5.60% by the end of 2013. Currently, Royal Bank’s posted 5 year fixed mortgage rate is sitting at 5.24%.
Although this report paints a healthy outlook for the Canadian housing market, it does suggest a cooling from the aggressive growth numbers we’ve seen in recent years. This balanced prediction does not foresee any housing bubbles or market corrections to come. The most pessimistic of readers could only glean downward moves in the rate of growth for the housing market. Still, housing price increases at the rate of inflation will provide significant returns for homeowners who have leveraged their investment with a low interest rate mortgage.