When will home prices drop?

Do Negative Internal Economic Conditions Exist?

• 
• By Nancy Smith
• Qualicum Beach REALTOR®
• Published: Sep 5th, 2020 at 2:42 pm

President E. Siddal, CMHC, brief clip follows below.

This 24 secon clip is from the 3.5 hour FINA meeting, courtesy ParlVU(this segment at 15:38):  https://parlvu.parl.gc.ca/Harmony/en/PowerBrowser/PowerBrowserV2/20200519/-1/33255?Language=English&Stream=Video#info_

The Home Price Index (HPI,) which is a better reflection of the market because it strips out volatility and adjust for volume and type of housing, increased at 7.4% annual rate to July /2020.

The actual (not seasonally adjusted) national average price for homes sold in July 2020 was a record $571,500, up 14.3% from the same month last year.

One might consider the CMHC anticipated drop in home pricing will be mitigated by the past and current home price increases. For example, if the HPI increased 7.4% year-to-date in July/2020, and has increased again in August, one might assume a 9 - 18% CMHC decrease would be a modest adjustment.

Vancouver Island had a robust August sales market which has continued into September, so the next four month to the end of 2020 should be quite interesting. Will prices drop as much as CMHC predicts, or is the Canadian economy on much better footing than the news, the banks and CMHC predicts?

One might remember the market collapse of 2008 - 2009 was a USA issue due to policies leading to sub-prime mortgages and other economic influences. Canada basically escaped similar carnage, and perhaps we are on par again, not to follow in our neighbor's footsteps. "When will prices drop?" may not be a good thing, as it would be a sign of negative internal economic conditions in Canada.