Canada Housing Market Outlook to 2027

• Pragmatic policy across interest rates, immigration and taxation could deliver a stable, albeit expensive Canada housing market through to 2027

• RE/MAX Canada launches chapter one of Unlocking the Future: 5 Year Outlook Report in partnership with CIBC and The Conference Board of Canada

• This series of reports, done in collaboration with relevant area experts, will be issued through 2022 and will leverage specific “what if” scenarios related to economic policy decisions, climate change, the future of on-premise work and technology, and how they may impact the housing market in Canada

The Canada housing market reflects more than just a commodity or an investment that is measured month-over-month or quarter-over-quarter. And while it is a key economic indicator, the vast majority of existing and prospective homeowners see their home as a long-term financial, as well as emotional, investment. Unlocking the Future, Chapter One examines economic scenarios across interest rates, immigration policy and taxation, in cooperation with Benjamin Tal, Deputy Chief Economist and Jamie Golombek, Managing Director, Tax and Estate Planning, CIBC; and The Conference Board of Canada. This chapter concludes, with caveats, that despite economic headwinds, the housing market in Canada is more stable than many perceive and is likely to sustain stability over the next five years. Though housing prices in Canada will likely remain expensive, price growth may be less extreme than that experienced in the last three years.

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This report, as well as the ones that follow, tries to provide something that will help Canadians take a longer-term view of their investments by taking into consideration possible hypothetical outcomes based on historical learnings, and current and near-future market conditions. The intention is to have Canadians come into this idea “sandbox,” but keep in mind RE/MAX Canada and its collaborators on this report are not trying to predict the future, but rather just model some different versions of it for the collective benefit of Canadians.

“Extraordinary housing activity over the past two years has caused a great deal of uncertainty and anxiety among many Canadian homebuyers, sellers, and those who aspire to enter the market. To help ease some of the worries and concerns that come with today’s social and economic volatility, we wanted to give Canadians more long-term context and clarity ─ to be more informed ─ about their most precious possession and one of their most valued assets,” says Christopher Alexander, President, RE/MAX Canada.

Alexander adds, “as a scenario-based exercise, chapter one also looks at the scenarios that could potentially ‘upset the applecart’ should the Bank of Canada overreach in fighting inflation, politicians fail to tie immigration policy to our labour market needs, or our governments seek to rein-in deficits with aggressive new taxes. While we anticipate it could be a stable five years ahead, it’s by no means assured.”

Key takeaways:

• Interest rate increases at a reasonable schedule of four times a year would create a stable and more relaxed housing market over the next five years.
• Current immigration policy is focused significantly on accepting new Canadians on the basis of their economic and social capital characteristics (i.e., education, French/English language skills, and previous Canadian work or study experience). However, the policy could be more clearly linked with national labour market demands, especially relating to construction trades, potentially addressing housing supply issues driven by skill shortages.
• While the deployment of taxes such as the foreign buyer’s tax has been front and centre over the last few years as a tactic to calm Canada housing market prices, removing the exemption on capital gains for principal residences could have a greater impact on market disruption.

According to a Leger survey commissioned by RE/MAX Canada as part of the report:

• Over the next five years, Canadians said taxation (50 per cent), rising interest rates (46 per cent), and the possibility of an economic recession (42 per cent) rank as their top three worries when it comes to buying a home.
• Thinking ahead five years, 37 per cent of Canadians say their preferred community would be suburban, while 30 per cent want to live in an urban environment, and 27 per cent say rural.
• 61 per cent of Canadians agree that real estate is the best long-term investment they could make (which they don’t see changing over the next five-years), however, rising property-related taxes (64 per cent), rising interest rates (58 per cent) and a possible capital gains tax (55 per cent) are factors that would cause barriers or concerns when it comes to buying a home in that time frame.

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About the 2022 Unlocking the Future Report:
The 2022 RE/MAX Unlocking the Future Report includes insights from RE/MAX Canada partners CIBC Capital Markets and The Conference Board of Canada and is purely hypothetical. Insights were supplemented with research from a Leger consumer survey (details below).

About Leger:
Leger is the largest Canadian-owned full-service market research firm. An online survey of 1,633 Canadians was completed between March 4-6 using Leger’s online panel. Leger’s online panel has approximately 400,000 members nationally and has a retention rate of 90 per cent. A probability sample of the same size would yield a margin of error of +/- 2.43 per cent, 19 times out of 20.

About the RE/MAX Network:
As one of the leading global real estate franchisors, RE/MAX, LLC is a subsidiary of RE/MAX Holdings (NYSE: RMAX) with more than 140,000 agents in almost 9,000 offices with a presence in more than 110 countries and territories. Nobody in the world sells more real estate than RE/MAX, as measured by residential transaction sides. RE/MAX was founded in 1973 by Dave and Gail Liniger, with an innovative, entrepreneurial culture affording its agents and franchisees the flexibility to operate their businesses with great independence. RE/MAX agents have lived, worked and served in their local communities for decades, raising millions of dollars every year for Children’s Miracle Network Hospitals® and other charities. To learn more about RE/MAX, to search home listings or find an agent in your community, please visit remax.ca. For the latest news from RE/MAX Canada, please visit blog.remax.ca.

Forward looking statements:
This report includes “forward-looking statements” within the meaning of the “safe harbour” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “believe,” “intend,” “expect,” “estimate,” “plan,” “outlook,” “project,” and other similar words and expressions that predict or indicate future events or trends that are not statements of historical matters. These forward-looking statements include statements regarding housing market conditions and the Company’s results of operations, performance and growth. Forward-looking statements should not be read as guarantees of future performance or results. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. These risks and uncertainties include (1) the global COVID-19 pandemic, which has impacted the Company and continues to pose significant and widespread risks to the Company’s business, the Company’s ability to successfully close the anticipated reacquisition and to integrate the reacquired regions into its business, (3) changes in the real estate market or interest rates and availability of financing, (4) changes in business and economic activity in general, (5) the Company’s ability to attract and retain quality franchisees, (6) the Company’s franchisees’ ability to recruit and retain real estate agents and mortgage loan originators, (7) changes in laws and regulations, (8) the Company’s ability to enhance, market, and protect the RE/MAX and Motto Mortgage brands, (9) the Company’s ability to implement its technology initiatives, and (10) fluctuations in foreign currency exchange rates, and those risks and uncertainties described in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission (“SEC”) and similar disclosures in subsequent periodic and current reports filed with the SEC, which are available on the investor relations page of the Company’s website at www.remax.com and on the SEC website at www.sec.gov. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Except as required by law, the Company does not intend, and undertakes no duty, to update this information to reflect future events or circumstances.