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I think 20% is conservative. Interest rates are likely going to rise another couple percent, and that alone would be enough to bring prices down 20% without any other factors (as mortgage payments would be the same). Although inflation is working against housing prices coming down.
In Canada, I think it'll be a massacre. Unlike the US, where people can get 30 year fixed mortgages, most Canadians are on 5 year terms that they have to renew. A bunch of people are going to be renewing from ultra-low rates over the next year, and it's going to be unmanageable for many. Further, many Canadians go with adjustable or variable rate mortgages. As interest rates rise, many have seen their mortgage payments increase by 50% (here's a thread on Reddit about it). Also, there are fixed payment mortgages that have become rather popular, where your payment stays the same, but the bank just reduces how much goes to principal if rates go up. Some people are basically paying every dime to interest. And once the next hike comes, it'll 'trigger' an actual increase in their monthly payment. Many of these people aren't aware that their payments are all going to interest, and likely think they've been building equity this past year.
When they go to renew, they'll be faced with the prospect of much higher interest rates, making their payment bigger, and the fact that they basically paid nothing on their mortgage, but 5 years of their term has passed. So we'll likely see people refinance. But refinancing may not be so easy if your mortgage is underwater or have little equity. So that means foreclosures and short sales will put more downward pressure on housing.
I don't know what the US is facing and how it'll affect things. But I'd imagine if mortgage rates climb ~3%, then a 20% drop in prices is basically guaranteed (aside from the government coming in and tossing money around). Though housing prices haven't dropped as much as I'd have thought (especially in Canada) with the increasing interest rates.
Notably Canada's also set for a much harsher recession than the US.
Both Toronto and Vancover have massive percentages of their economy and employment tied up in selling real estate to the world's wealthy that just isn't the case in the US outside NYC or California...
If housing crashes it will become a reinforcing cycle since thenhundreds of thousands employed in real estate would lose their jobs and be forced to downsize their houses.
Canada is actually a much poorer country than the US... depending on the swing of the dollar it's per capita GDP is closer to 40k compared with America's 60k... Canada is far more comparable with France where 1mil will buy you a literal castle in terms of it population's actual income... so if the housing market falls out, its probably not going to come back for a generation... especially when you consider Chinese migration and money is drying up
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