The Canada Mortgage and Housing Corporation expects home prices in Windsor-Essex to decline in 2023 but rebound in 2024 and 2025.
The CMHC's Spring 2023 Housing Market Outlook reports the decrease in prices in 2023 will be the result of reduced home ownership demand due to high borrowing costs.
The report says beyond 2023, housing demand will grow as borrowing costs stabilize which will bring back pressure on house prices.
CMHC senior economist Tad Mangwengwende says when borrowing costs are lower they know there will be pent up demand from those who had to stay in the rental market.
"When borrowing costs are lower, those people will move into that market, they will now express themselves into the home ownership market. They're demand will start putting some of the demand on prices to increase," he says.
The CMHC expects expect prices to rebound in 2024 and 2025. However, growth will be lower than that seen over the last two years, when the market saw intense bidding wars on houses due to the migration of relatively high-income buyers from the Greater Toronto Area.
Mangwengwende told AM800's The Shift with Patty Handysides that pressure where multiple waves and the mass exodus of people from the Greater Toronto Area, because that's not happening again, the pressures to rise at that level will not be there.
According MLS, the average resale price in the Windsor area in 2022 was $602,809.
The forecast calls for an resale price in the range of $460,000- $512,000 in 2023, $480,000-$560,000 in 2024 and $495,000-$611,000 in 2025.
Mangwengwende says high homeownership costs will lower rental vacancies and drive up rents in 2023. New housing construction will be constrained by skilled-labour shortages that will contribute to increases in house prices in 2024 and 2025.
The Windsor CMA rental apartment vacancy rate was at a record low of 1.8 per cent in 2022. In 2023, it’s expected to fall to one per cent. The decline will be the result of strong demand from population growth and from households delaying homeownership and staying in the rental market longer. As a result, rents are expected to grow strongly.