If you’re looking to buy a home, a new report from the Bank of Montreal (BMO) finds you can expect some relief in affordability — if you’re willing to wait until 2027.
BMO says falling interest rates, stable home prices, and rising incomes may all play a role in returning affordability to pre-pandemic levels.
Right now, the report says, the high cost of home ownership is keeping sales in the “tank” and creating a “nation of renters.”
But with the right combination of the three factors, BMO says a better market is on the horizon.
The report predicted, “Mostly flat home prices for the rest of 2024 before picking up to a modest 3 per cent annualized pace through 2027, and sturdy per-capita income growth of just under 3 per cent per annum, just below the two-decade norm.”
In this “well-behaved” scenario, BMO says affordability will gradually improve — but remained “strained” — by the end of 2027.
Sal Guatieri, a senior economist at BMO Capital Markets, told Now You Know host Rob Snow progress will be slow, adding that recent federal changes in immigration policy and zoning opportunities will help.
“We basically need slower demand growth, little faster supply growth, and eventually we’ll get affordability moving in the right direction, but it still will take several years,” said Guatieri.
The report said given its predictions for rates, prices, and incomes, “a pathway back to housing affordability for long-suffering renters and young people, especially in B.C. and Ontario, is doable but will take time.”