CIBC World Markets says that the average Canadian house price will double in the next 20 years:
Yes, the number of people aged 45 to 54 is expected to drop by 2.5 million by 2026 as the baby boomers age. But this age group accounts for only 12 per cent of the housing demand, it said.
Most home purchases take place when people are younger. CIBC says 68 per cent of all first-time home buying is done by people aged 25 to 44. That group is expected to decline only slightly in the coming two decades.
So only slightly less demand = double prices. They base their prediction on three factors:
–Interest rates are expected to stay low
For twenty years? Wow! That’s some crystal ball!
-Immigration is expected to increase
Good thing since its so much lower in BC now than the 90’s.
-New mortgage products will make home ownership more accessible.
What great news! You wouldn’t happen to offer any of those would you CIBC? You know, like those great 60 year mortgages in Japan?
Update: Cailin points out the obvious spin on this story. If all these positive factors come into play and house prices ‘double’ in the next twenty years that works out to be about 3.75% a year compounded, or a bit less than a presidents choice savings account, but I guess that doesn’t sound quite as impressive huh?