Real estate for sale signs are shown in Oakville, Ont. on December 1, 2018. Canada Mortgage and Housing Corp. expects a drop in home prices in the country’s biggest cities amid “severe declines” in home sales and construction. The federal housing agency says a combination of factors related to the pandemic, such as higher unemployment and lower income, will slow housing starts and push sales and home prices below pre-COVID levels. CMHC says the market likely won’t see a return to pre-pandemic levels before the end of 2022. THE CANADIAN PRESS/Richard Buchan

CMHC expects uneven and uncertain recovery in country’s housing market

A potential second wave of the virus, higher unemployment and the pace of an economic recovery could affect housing

Canada’s housing market is headed into a period of ”severe declines” in sales and construction, but the full effect of COVID-19 on real estate is far from certain at this point, according to a new report by the Canada Mortgage and Housing Corp.

CMHC deputy chief economist Aled ab Iorwerth described an uneven recovery that will “vary considerably” across different parts the country, and urged that forecasts be taken in the context of an ”extreme uncertainty” that lies ahead.

Average home prices in Toronto, Montreal and Ottawa are expected to rebound sooner, starting in late 2020 and rolling into early 2021. Prices in Vancouver, Edmonton and Calgary may not bounce back until later in the forecast period, the report said.

Calgary and Edmonton will see average home prices decline due to uncertainty around oil prices and economic recovery in the region.

Volatile factors, such as a potential second wave of the virus, higher unemployment and the pace of an economic recovery, could influence the direction of the housing market in the coming months, ab Iorwerth explained.

“We are still at the early stage of understanding the impact of COVID-19 on the economy in general, and on the housing market in particular,” he said on Tuesday in a conference call.

“Limited data availability means we will remain in the zone of considerable uncertainty.”

He said the CMHC is relying on its own housing market outlook from late May as its central forecast for the coming months. It expects the housing market likely won’t see a return to pre-pandemic levels before the end of 2022.

Greater cultural shifts may also affect the speed of recovery, he said, and many of those developments are so recent that they’re hard to fully comprehend or quantify.

Cities which lend themselves to industries that allow for working from home, could prove to make those regions “more resilient,” which could have ripple effects on housing, ab Iorwerth said.

“We do not yet have a grasp on the answers to questions, such as the impact of greater work from home, differing impacts across industries, the effect of less mobility across provincial boundaries and the decline in immigration following cutbacks and international aviation,” he added.

ALSO READ: Walmart Canada investigating after ‘All Lives Matter’ shirts cause outrage

There are also substantial questions about how rental markets will be affected.

He noted that a decline in immigration and interprovincial activity will lower demand for rental units, which combined with a “significant new supply in rental properties close to being completed,” could mean that vacancy rates are likely to jump.

“Such increases in vacancy rates, however, will be from historically low levels in Toronto and Vancouver, in particular,” he noted.

Earlier this month, CMHC reported the annual pace of housing starts, excluding Quebec, fell 20.4 per cent in May compared with April.

The Canadian Real Estate Association reported in May that home sales had their worst April in 36 years, with home sales falling 57.6 per cent from a year earlier to 20,630 sales for the month.

The Canadian Press


Like us on Facebook and follow us on Twitter.

Want to support local journalism during the pandemic? Make a donation here.

CoronavirusHousing

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Comments are closed

Just Posted

Deer and moose die after being chased by dogs in Naramata

BC conservation officers are asking the public to control their pets

Two facing charges after RCMP search Penticton motel, find firearms, drug-trafficking related items

Samuel Prescott-Perreault, 32 years old, and 27-year-old Paige Rist are facing charges

Morning Start: There are over 200 dead bodies on Mount Everest

Your morning start for Wednesday, July 8, 2020

Booze on beach extended through summer in Penticton

Pilot project will stay in place until Oct. 15

Princeton ATV rider slapped with numerous charges after complaint of near miss on the KVR

‘I would never defend actions like that’ - Ed Vermette, Princeton ATV Club president

The pandemic is widening Canada’s workplace gender gap

Gender pay gap is incentivizing fathers to work while mothers watch children, a new B.C. study has found

3 people dead in Prince George motel fire

Fire personnel believe the blaze was suspicious although investigation in early stages

Man found dead on Okanagan trail identified as Hollywood actor

GoFundMe campaign launched for man found dead at summit of Spion Kop

B.C. sets terms to review police, mental health, race relations

MLAs to recommend Police Act changes by May 2021

Trail RCMP officer accused of criminal harassment, forcible entry

BCPS: The charges against Murchie date between 2017 and 2020

LETTER: Customer service builds strong support

Company showed positive attitude and swift response

Feds announce $8.3M to deal with ‘ghost’ fishing gear in B.C. waters

Ghost gear accounts for up to 70 per cent of all macro-plastics in the ocean by weight

COLUMN: Fiscal sticker shock

Deficit and debt increasing while Canada’s credit rating has been downgraded

Most Read