Source: RBC Economics.
Rising interest rates and supersized home prices are also expected to further wear into home prices. “We estimate households will soon have to allocate 15% of their take-home pay just to debt servicing, with half of this attributed to mortgage costs,” he adds.
Earlier this year, the bank said they expect home prices to erode significantly over the next year. They went so far as to forecast the next correction will be the largest on record, with pricey cities like Toronto and Vancouver taking the biggest hit.