Officials at the Canada Mortgage and Housing Corporation said on Tuesday that they expect real estate prices not to return to pre-recession levels by the end of 2022 at the earliest.
The housing agency also warned that the impact of the COVID-19 pandemic is unpredictable and beyond its worst estimates before the epidemic.
CMHC regularly performs stress tests to estimate what could happen under various severe conditions, but CEO Evan Siddall said stress tests focus on what are considered “plausible” scenarios .
“In January, we looked at a pandemic scenario that was not as bad as that,” said Siddall in a conference call to discuss CMHC’s annual financial report for 2019.
“And I’m sure you will understand that the field of plausibility has expanded considerably thanks to all the experience we have had. “
Siddall said the federal crown corporation – which provides market analysis for the housing-related industries, mortgage insurance for lenders and funding for public housing projects – is now revising its estimates on an accelerated basis based experience of spring and summer.
He said preliminary figures indicate that about 10% of homeowners in Canada have chosen to delay their mortgage payments, although the rate appears to be higher in parts of the country that are heavily dependent on the oil and gas industry. .
“Tens of thousands of Canadians are struggling to meet their mortgage commitments,” said Siddall.
Mortgage and housing in Canada have given lenders the ability to extend mortgage deferrals for another six months, he said, but deferrals will mean missed payments will be added to the total amount of the mortgage owed. according to terms determined by a contractual agreement between the lender and the borrower.
CMHC chief economist Bob Dugan said it is difficult to make reliable forecasts due to the number of unknown variables, including deteriorating income levels due to unemployment, timing future immigration and the construction industry’s reaction.
“But for Canada and for Ontario, I think the best case we are looking at … house prices are back to pre-recession levels, at the earliest, by the end of 2022,” said Dugan .
The CMHC presentation came shortly after the release of April statistics for Canada’s largest real estate market.
The Toronto Regional Real Estate Board said that April home prices in the Greater Toronto Area fell 11.8% from March when COVID-related closings, including open houses , began to be implemented in the middle of the month as Canada intensified its fight to control the health impact of the coronavirus.
Prices for tenants in the Greater Toronto Area also fell during the month, with average bedroom rental falling 2.7% to $ 2,107 and average 2-bedroom rent falling 4.1% to $ 2,705 – still high compared to many Canadian cities.
The Greater Vancouver Real Estate Board said on Monday that its benchmark composite price index was up 0.2% from March, but that sales had bottomed out in nearly 40 years – 62.7% below their 10-year average.
Other major cities will release their local and regional figures before a national count that will be released by the Canadian Real Estate Association on May 15.
Siddall said the recent federal emergency measures legislation will provide CMHC with the financial resources it needs to carry out its functions, which includes, for the first time, helping small businesses with a rent assistance program announced last month.
However, he said, CMHC had finished 2019 with a solid financial position and said it was continuing towards the 2030 goal of ensuring that all Canadians can get the housing they need at affordable prices.
In the meantime, he said, it is likely that incomes and house prices will “subside”.
“And it is how they evolve relative to each other that will define the gap between where we are now – after the crisis – and where we will be.” “
This report from The Canadian Press was first published on May 5, 2020.