Housing prices in Canada will fall 30 percent this year from their peak in February last year, predicts Oxford Economics. Prices are already down 14 percent, and in a worst case scenario—which is unlikely, Oxford Economics says—they could drop 48 percent.

“The seasonal pick-up in resale activity this spring will be a key litmus test in a recessionary environment,” said economists Tony Stillo, Michael Davenport, and Cassidy Rheaume in their report, according to the Financial Post.

“If distressed homeowners boost listings faster than sales, months of inventory will shift further to a buyers’ market and prices will fall even lower,” the report said.

The 48 percent scenario could happen if there is a recession and a surge in defaults and insolvencies. “This is quite severe and highly unlikely,” Stillo said, according to the Toronto Star.

The best-case scenario brings prices to 27 percent below last year’s peak. That’s if global supply chains improve and inflation eases.

Home resales in Vancouver have already plummeted by more than 45 percent, according to a Feb. 7 report by RBC. In the Toronto area, resale activity is the quietest it has been in 14 years, said RBC.

Monthly rates of decline for home sales have slowed. “This development along with our expectation that the Bank of Canada has completed its rate hike campaign point toward a cyclical bottom around spring or summer,” RBC said.

Aggressive rate hikes since March 2022 have dampened the market, correcting the spike in housing prices. “We think the price correction has a little longer to run,” said Stillo in the Oxford Economics report.

Residential investment was down 13 percent from March 2022, the report said, and is expected to fall another 19 percent by the third quarter of 2023.