House prices have risen significantly in recent years. Many buyers, especially those with limited financial resources, are eager to know whether housing prices will become more affordable and when.

The main question for most of the general population is whether the housing market will collapse and when this will happen, whether prices will drop or continue to rise.

The simple and straightforward answer is: the real estate market in Ottawa, Ontario, or Canada will not collapse in 2022 or 2023 or in the near or distant future, whether short-term or long-term. The rise in interest rates does not cool the market as some expected. Current trends and forecasts for the next 12 to 24 months clearly show that the housing market is likely to remain strong for many reasons.. summarized in what was written in parentheses (rising prices for all goods in general, shortage of real estate inventory, shortage of labor in construction, increase in demand and increase in the number of immigrants, difficulties and high shipping costs). The market may calm down,,, and we may see some temporary corrections (for example a decrease of 5 or 10%) but the market will not collapse and will return to rising. Here are some details and some side points that should be taken into consideration.

Increased demand for homes: This is driven by what is called first-time home ownership by the upcoming generations (so-called Millennial generation and then Generation Z. In other words, the population under 40 years old) and this age group makes up the largest percentage of home seekers compared to those who are middle-aged or older.

Supply cannot keep up with demand: The imbalance between supply and demand is the main reason behind the rapid increase in house prices, and the insufficient construction of homes over the past decade. Home builders will take several years at least to add enough new supply to balance the market, considering the rising costs of building new homes and the increased labor costs for those working in construction.

Borrowers are less likely to default on their mortgages: Among the differences between today’s housing market and the housing market in the past (and we all remember the economic crisis of 2008-2009) is that lending standards are stricter due to lessons learned and newly enacted regulations, which basically means that those approved for mortgages today are less likely to default than those approved during the previous lending period. It is rare today to encounter a lender proceeding to sell a house due to loan default. Previously, applicants did not have to provide income documentation - a common practice before the housing collapse. Also, many government-backed loans have specific criteria, such as minimum credit scores and down payment requirements. Regulators now expect lenders to verify the borrower’s ability to repay the loan among other criteria. It requires tax returns for the last two years and many proofs. Even in the case of increased interest on mortgages, lenders and the Bank of Canada previously had what is called mortgage stress tests and have a current situation study, and we will not go into details about mortgages from this angle.

New immigrants and returning students: It is not surprising that many studies have found that immigration increases house prices with the increased pace of immigration acceptance and university students returning to study (instead of remote learning) and investors’ desire to seek refuge in Canada as a safe and stable country.

Instability and conflict in Ukraine: Some believe that the continuation of the conflict will increase inflation and mortgage interest rates and the public will not be able to obtain a mortgage to buy homes, resulting in a slowdown in the real estate market and a drop in prices. I agree with some of this, with the personal addition that it will affect the real estate market but will not lead to a decline in prices (overall). Because instability has already led to an increase in prices and fuel prices. And immigration to Canada... thus affecting the rise in real estate prices and as a mathematical equation, the result will not lead to a collapse.

Final word: Investing in real estate is generally safe, especially in the long term, and in my personal opinion, it is better than starting a project whose consequences you do not know.. Many who randomly start small projects without study according to statistics end up bankrupt. Other uncertain investments like cryptocurrencies and the stock market... etc. If you are an investor and want to invest short-term in real estate, I advise you to study the step and consult a specialist in this regard.. Real estate investment is good for the long term...