Photo: Western Investor
The Canada Mortgage and Housing Corporation (CMHC) released a housing forecast on May 27 which predicted a nightmarish housing market collapse with national sales down to 29 percent, a drop from 50 to 70 percent. hundred and average house prices down to 18% with no real recovery until 2022.
“Canada will experience a historic recession in 2020 with significant declines in housing market indicators,” said the special edition of Housing Market Outlook in the spring of 2020.
Bob Dugan, CEO of CMHC, was quick to add the warning that “these housing prospects are subject to unprecedented uncertainty due to the pandemic” during a conference call with the media.
Western Canada will be particularly affected due to the dependence of the Prairie provinces on the resource industry and British Columbia’s exposure to the tourism and hospitality sectors, report says. who were hammered by the global COVID-19 pandemic.
But CMHC’s uncertainty about its forecasts is well placed, according to residential industry experts, who say there are positive and early signs that the current downturn may be brief but brutal.
“We are already seeing that inquiries from home buyers have increased 5% from pre-COVID levels,” said Elton Ash, Western Canada’s executive vice president for Royal LePage. Ash noted that the high level of home sales at the start of this year is an indication of rolled-up demand that will lead to a faster recovery than most expect. Ash is particularly optimistic in the Greater Vancouver area, noting that prices for reference homes rose in April and May compared to a year earlier, even as sales plummeted in the face of the pandemic.
“It is unrealistic to see the drop in prices suggested by CMHC,” said Ms. Ash. He sees downward adjustments in prices in British Columbia. maybe 5 to 10 percent, depending on the region.
“Yes, there have been economic difficulties, but not to the extent that CMHC suggests,” he said.
Ash added that real estate agents and consumers have widely embraced the latest technology for virtual home visits, announcements and communications, which has allowed many home transactions to continue.
Brendon Ogmundson, chief economist of the BC Real Estate Association, is also confident that the “resilience” of home buyers will lead to a recovery later this year after housing sales plummet with the arrival of COVID-19.
“We should be happy that sales have only dropped by 50% when you consider that this is a global pandemic,” he said. Ogmundson said home prices in British Columbia will remain fairly stable as the number of homes for sale has dropped by almost 25% due to social isolation. In April, he added, the provincial benchmark price for homes was 7.8% higher than in April 2019.
BCREA expects a recovery in sales to begin in the second quarter, fueled by “very low mortgage rates and pent-up demand,” said Ogmundson,
Ogmundson also noted that the majority of jobs lost are at the bottom of the income ladder. “It will have more impact on the rental housing market than those who buy homes,” he suggested.