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

Unofficial holidays: Here’s what people are celebrating for the week of Sept. 20 to 26

Rabbit Day, Hobbit Day and One-Hit Wonder Day are all coming up this week

Interior Health reports three additional COVID-19 cases in region

The number of cases in the region since the beginning of the pandemic are now at 492

Vehicle found “burnt to a crisp” off of Hwy 5

Update from Clearwater RCMP detachment

One day, your way

Information about this year’s Terry Fox (virtual) Run

B.C. or Ontario? Residential school survivors fight move of court battle

It’s now up to Ontario’s Court of Appeal to sort out the venue question

Young B.C. cancer survivor rides 105-km with Terry Fox’s brother

Jacob Bredenhof and Darrell Fox’s cycling trek raises almost $90,000 for cancer research

B.C. migrant, undocumented workers rally for permanent residency program

Rally is part of the Amnesty for Undocumented Workers Campaign led by the Migrant Workers Centre

Preparations underway for pandemic election in Saskatchewan and maybe B.C.

Administrators in B.C. and around the country are also looking to expand voting by mail during the pandemic

Nearly 20 per cent of COVID-19 infections among health-care workers by late July

WHO acknowledged the possibility that COVID-19 might be spread in the air under certain conditions

Supreme Court Justice Ruth Bader Ginsburg dies at 87

The court’s second female justice, died Friday at her home in Washington

Emaciated grizzly found dead on central B.C. coast as low salmon count sparks concern

Grizzly was found on Gwa’sala-‘Nakwaxda’xw territory in Smith Inlet, 60K north of Port Hardy

VIDEO: B.C. to launch mouth-rinse COVID-19 test for kids

Test involves swishing and gargling saline in mouth and no deep-nasal swab

Young Canadians have curtailed vaping during pandemic, survey finds

The survey funded by Heart & Stroke also found the decrease in vaping frequency is most notable in British Columbia and Ontario

Most Read