On Tuesday, the Canadian Mortgage and Housing Corporation released its summer 2020 Housing Market Outlook, the most recent in a series of wild guesses the organization has made around the post-COVID-19 growth expected in Canada\u2019s major housing markets.<\/p>\n
The report forecasts a long road to recovery for Canadian housing but says certain markets will recover faster than others. Cities built around the service sector will likely rebound faster, as companies operating in the space are able to operate remotely. Those reliant on oil and gas, like Alberta\u2019s major metropolitan areas, have been deemed the riskiest in Canada.<\/p>\n
Robert McLister, founder of RateSpy.com, has little patience for CMHC\u2019s recent projections.<\/p>\n
\u201cForecasting the recovery time-frame\u00a0is like forecasting next winter’s snowfall,\u201d McLister told MBN. \u201cHow can you confidently\u00a0know when a vaccine will be widely available, or how many people won’t be rehired, or how long government income support will last, or if mortgage deferrals will be extended, or when immigration will ramp back up, or how many homeowners will panic-sell, and so on and so on.\u201d<\/p>\n
McLister stressed that employment and income numbers remain the key metrics in predicting the future of Canada\u2019s housing markets.<\/p>\n
Past recessions have seen significant depressions in home prices, even if only temporarily. McLister says, though, that policy moves like the CERB coupled with a disproportionate unemployment hit to non-homebuying demographics might see Canada avoid the price slumps of 1981, 1990, and 2009.<\/p>\n
Migration \u2013 one more giant question mark<\/strong><\/p>\n The report raised concerns around the moratorium on migration due to the pandemic, noting that rental housing will be the most impacted by a lack of new immigrants. McLister agrees, saying a drop in immigration is unlikely to directly impact the purchase market in the short-term. CMHC believes that reduced immigration could lead to a brief decrease in housing starts, which could impact already strained supply levels.<\/p>\n It\u2019s a concern shared by James Laird, co-founder of RateHub.ca.<\/p>\n \u201c[I]n the longer term, we\u2019ll see slowed house construction, which might counterbalance the immigration effects we\u2019d see in the long term,\u201d he says, stressing the important role immigration plays in supporting both population growth and the Canadian housing market.<\/p>\n \u201cRemoving immigration takes away a significant variable that was adding a lot of demand in major urban centres,\u201d he says. \u201cWe\u2019ve been welcoming hundreds of thousands of new Canadians every year, many of them coming with wealth and looking to buy a home. Until immigration is able to open up again, that will take some demand from the market.\u201d<\/p>\n City by city<\/strong><\/p>\n Edmonton and Calgary are the two highest risk Canadian cities listed on the report, due to their deep economic ties to oil and gas. McLister says brokers in Alberta should \u201chope oil stays north of $40 a barrel,\u201d and secure a HELOC for clients that might need access to their equity in future.\u00a0\u00a0<\/p>\n Vancouver housing sales had been slowly recovering from a recent nadir in 2018\/19. The report says the pandemic is likely to slow that recovery even further. Rentals in Vancouver, too, are more exposed to the impacts of rising unemployment and a closed border. Coupled with ongoing construction projects, the report predicts an increase in the supply of rental housing coupled with falling demand.<\/p>\n The report predicts that housing starts in Toronto will rebound in 2021, recovering faster than the rest of Ontario. Sales and prices are predicted to rebound in 2022 largely due to a well-developed service economy in Toronto, especially financial services, which could see economic recovery ongoing in Toronto despite a potential second wave of the virus. The report says that with construction restarting in Toronto, there could be a glut of housing stock on the market that outpaces a depressed demand.<\/p>\n McLister isn\u2019t panicking, though. He says indicators like HouseSigma\u2019s median GTA price trend, \u00a0which are reason for hope<\/p>\n CMHC says Montreal\u2019s housing boom, which hit new heights in Q1 of 2020, was snuffed out by the pandemic. Recovery there may follow a similar trajectory to Toronto\u2019s, but migration numbers in coming years will play an even more significant role in the vacancy rate for Canada\u2019s second largest city.\u00a0<\/p>\n In this environment of uncertainty and regional disparity, James Laird says that brokers need to <\/p>\n \u201cThe benefit of being a mortgage broker is we\u2019re able to ebb and flow with what happens in the market, when purchases dry up we can refocus on refinances and renewals,\u201d Laird says. \u201cBy nature we\u2019re resilient. Brokers need to continue to focus on the financial health of the household and make sure people are prudent with what they\u2019re purchasing and I think we should be fine through the coming years.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":" On Tuesday, the Canadian Mortgage and Housing Corporation released its summer 2020 Housing Market Outlook, the most recent in a series of wild guesses the organization has made around the post-COVID-19 growth expected in Canada\u2019s major housing markets. The report forecasts a long road to recovery for Canadian housing but says certain markets will recover […]<\/p>\n","protected":false},"author":13,"featured_media":22766,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[4],"tags":[],"acf":[],"_links":{"self":[{"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/posts\/8773"}],"collection":[{"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/users\/13"}],"replies":[{"embeddable":true,"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/comments?post=8773"}],"version-history":[{"count":1,"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/posts\/8773\/revisions"}],"predecessor-version":[{"id":22765,"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/posts\/8773\/revisions\/22765"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/media\/22766"}],"wp:attachment":[{"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/media?parent=8773"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/categories?post=8773"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/tags?post=8773"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}