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

Just Posted

Weekly RCMP update: Bike thefts and persistent driving while prohibited

Campbell River RCMP detachment seeing bicycle theft as an ongoing concern

Over 21 Campbell River tourism businesses benefit from resiliency program

Vancouver Island Tourism Resiliency Program is helping businesses pivot and adapt to the COVID-19 imposed changes in industry

NIC online marine training accessed by mariners across the country

NIC was among the first post-secondary schools to receive approval for digital marine courses

Search for missing hiker suspended once again

Search for Laurence Philippsen was revived over the weekend after new information was received

NIC practical nursing students hone skills on pandemic’s front line

‘It also has become clear that this is my thing,’ – NIC practical nursing student Breanna Patterson

Recent surge in COVID-19 cases not unexpected amid Phase Three of reopening: B.C.’s top doc

Keep circles small, wear masks and be aware of symptoms, Dr. Bonnie Henry says

Mirror business directory and map

If you’d like to be added to the list, shoot us an email

B.C. NDP changing WorkSafeBC regulations to respond to COVID-19

Employers say reclassifying coronavirus could be ‘ruinous’

Baby raccoon rescued from 10-foot deep drainage pipe on Vancouver Island

‘Its cries were loud, pitiful and heartbreaking,’ Saanich animal control officer says

Statistical flaws led to B.C. wolf cull which didn’t save endangered caribou as estimated

Study finds statistical flaws in an influential 2019 report supporting a wolf cull

Windows broken, racist graffiti left on Okanagan home

Family says nothing like this has happened since they moved to Summerland in 1980s

Beloved Island woman dies at 106

Dorothy Adair adored by the many people she met in Chemainus in two short years

Man arrested for allegedly pushing unsuspecting seniors, jumping on cars at Parksville mall

Cops arrest man after ‘aggressive incident’ at Wembley Mall in Parksville

Most Read