If you are thinking of making a move anytime soon, you are probably thinking like many others, ' What's going to happen to home prices for the rest of the year? Are they going to fall and, if so, by how much?

Experts say that the price growth will moderate due to the shifting market, hence ongoing appreciation is still expected. This means that home prices won't really fall and the key reason for forecasted price growth is supply and demand.

The Housing Supply is Still Low

Even though the inventory is increasing, supply is still low! In the years leading up to the housing crisis in 2008, right before the crash, homebuilding increased significantly because buyer demand was so high due to loose lending standards that it enabled more people to qualify for a home loan. The resulting oversupply of homes for sale led to prices dropping during the crash and some builders left the industry or closed their businesses, which in turn led to a long period of underbuilding of new homes. Even though in the coming years, after the dust has settled and more new homes start to get built, it'll still take time to build enough homes to meet the deficit of underbuilding that took place 14 years ago. Continued, with more immigrants coming in and looking to purchase homes, that gap kept on getting wider and wider.

A recent article published by CMHC stated that Canada needs 3.5million more homes than planned to restore affordability.

Millennials entering the Real Estate Market will create sustained Buyer Demand

The drastic increase we experienced in home prices during the pandemic was because there was more demand than homes available for sale. It drove home prices up as buyers competed with one another for available homes due to historically low-interest rates. Although the buyer demand has moderated today in response to higher mortgage rates, studies show that the demand will continue to drive up due to the large population of millennials (born between 1981-1996) aging into their peak home-buying years of 25-34.

The combination of demand created by millennials and the low housing supply to support them will continue to put upward pressure on home prices.

What does it mean for consumers?

If you worry or are hoping that home values will fall and will continue to fall by a large percentage, then you have to think again, as experts believe home price appreciation will continue due to the continuing imbalance of supply and demand. Even though the rising interest rates have dampened demand somewhat, based on today's factors driving supply and demand, experts believe that the home price appreciation will continue but at a more moderate pace as the housing market continues its shift back towards pre-pandemic levels.

source: KCM, Census, NAR, Bankrate

Disclaimer: The above information is from sources believed reliable but should not be relied upon without verification. The publisher assumes no responsibility for its accuracy. You are encouraged to get independent legal advice before commencing any transaction.