One of the biggest real estate developers in Toronto says home prices in the city could drop as much as 20 per cent. Longer-term, though, sustained demand from immigration will prevent larger declines that could destabilize the market more broadly.

“Will there be a dip in prices? Yes,” Mitchell Cohen, the chief executive officer of Daniels Corp., said in an interview. “Is it 50 per cent? No. Is it 10 to 20 per cent? Probably. I don’t see a catastrophic bursting of this balloon that we’ve been living in because Toronto, the greater Toronto area, for Canada is a very important economic center. People will continue to come to Toronto, want to live in Toronto. And the units that we are building will be filled.”

Cohen’s projections are in line with some economists who say Canadian home values will give back some of the 50 per cent gain they saw through the course of the pandemic. That correction may already be underway, with the country’s benchmark home price posting its first annual decline in two years last month. Markets like Toronto, which had previously seen the biggest gains, have led the way down.

Cohen said the people most likely to get into trouble will be investors who bought units to flip, or whose mortgage payments are higher than what they can expect to collect in rent, as interest rates rise. While investors came to account for about a fifth of the market in Canada through last year, any units they’re forced to sell will ultimately find buyers or renters, amid record immigration levels, he said.