Hannah Betel June 29, 2020 No Comments
The federal housing agency released a special edition Housing Market Outlook report on Jun 23rd. The
report is real, honest, and raw, it ignores the stability we still see in the market and makes a tough but not at all improbable series of assessments for the next two years of Canadian real estate.
At heart, the report suggests that declines in prices are on their way, and should kick in later in 2020. This is in line with the September to October difficulties for the market many realtors are predicting (the period where mortgage deferrals will end, and people will have to service their mortgage debt again). The report believes 2021 will be a hard year for real estate across the country, and predicts that we will only see a full return to normal in 2022. 
On a positive note, the report believes that house prices in Toronto, Montreal, and Ottawa have stronger underlying fundamentals and will recover faster than other major urban areas in the country. Toronto with its strong economy and immigration hub, Montreal with its affordability, and Ottawa with the stability of plentiful public sector employment all serving as pillars of strength and potential resilience. The report is bearish, however, on Edmonton and Calgary. The pain Alberta is going through right now is deep, real, and pervasive. Oil prices are not high enough, product can’t get to market, Fort McMurray remains hard hit by fires, and commercial vacancy rates were already sky high before the onslaught of COVID-19 made everything far worse. Vancouver had the highest real estate prices in the country, so it’s fall has been more severe. British Columbia’s largest city will be at the mercy of international capital flows and the policies of its provincial government, and commodity prices. The city’s economy is dependent on trade, travel, and exchanges of ideas and people, and all of this activity has been cut off due to the disease.
The big question remains how quickly jobs and cash flow can return to the economy by the fall. No one can predict this. The CMHC is predicting, however, that the average home price in Toronto could decline to $825K in the Fall, falling to a further range of $739-840K by Fall of 2021. The agency believes that this dip will upsurge again to $880K two years from now, in the Fall of 2022. As of now, as we’ve reported, people keep buying, prices are holding firm, and activity in Toronto and especially Durham Region are reasonably healthy. 

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