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According to many forecasts from earlier this year, Canadian home prices should have fallen anywhere from 5% to 20% from pre-pandemic levels by now.

On the contrary, average prices are up more than 18% year-over-year and surpassed $600,000 for the first time ever in September, according to the Canadian Real Estate Association (CREA).

In fact, early regional data from October showed that prices were up 37% year-over-year in Montreal, 24% in Ottawa, 13.7% in Toronto and 6% in Vancouver.

Earlier in the year, RBC forecasted that prices would be down 5% from pre-COVID levels by the end of the year. Moody’s expected a 10% decline, while the Canada Mortgage and Housing Corporation (CMHC) put out a forecast of a 9-18% fall in prices. (I don’t think their prediction was year’s end).

In its Spring Housing Outlook, CMHC said this: "…sales and prices are likely to remain belowtheir pre-COVID19 levels by the end of our forecast horizon in 2022.”

And as recently as September, CMHC’s chief economist, Bob Dugan, said the agency continues to stand by its spring outlook, although the timeframe has been pushed back to 2021.

If their worst-case scenario of an 18% decline in home prices from pre-pandemic levels were to materialize, at today’s higher rates that would represent a 23.8% decline yet to come.

"When I say I stand by our forecasts, it’s really with respect to what are the broad trends we expect moving forward,” Dugan said in late September. "When I look at the housing market, there are a tremendous number of risks.”

Why Are Home Prices Still Rising?

Experts say one of the main factors keeping the pressure on home prices is lingering pent-up demand from the postponed busy spring homebuying market, which all but came to a halt this spring due to the lockdown restrictions. But, there are other factors as well.

"(Other) reasons have been cited for [these fresh records in home prices] – pent-up demand from the lockdowns, Government support to date, ultra-low interest rates, and the composition of job losses to name a few,” according to Shaun Cathcart, CREA’s senior economist.

In its Fall Market Outlook Report, RE/MAX said low inventory and high demand will continue to keep the pressure on prices, with prices anticipated to grow another -- albeit more moderate -- 4.6% in 2021.

"The bottom line is across Canada, there is an extreme amount of demand that far outweighs the amount of supply that's available today,” Christopher Alexander, executive vice president and regional director of RE/MAX, told yahoo Finance Canada.

Affordability has been maintained

Despite double-digit home price increases, affordability has been aided by record-low mortgage rates.

Fixed rates have fallen to all-time lows, now well under 2%, and the Bank of Canada has committed to keeping interest rates low for the next several years, which guarantees low variable rates.

Despite home prices up nearly 20% from last year, the average new homebuyer’s monthly mortgage payment is roughly $2,475 (based on Canada’s average home price) -- still  a bit less than it was compared to the April 2017 peak of $2,480.