Home prices in Metro Vancouver to drop later this year: CMHC

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Wait for a years-long downturn in Metro Vancouver’s residential real estate market because of the long impacts of COVID-19.Canada Mortgage and Housing Corporation (CMHC) has recently published estimates states housing starts in the Vancouver area will be “the contract significantly in the future,” with a request to take a fall due to the reduction of immigration, internal migration, the loss of household income due to a mass unemployment, and increased economic uncertainty affects consumer confidence.

Analysts say that the immediate effect of the COVID-19 accentuated the decline of the construction activity that was already underway before the pandemic, but housing starts are expected to experience some recovery by the end of 2020 at a rate that is based on the region’s fundamentals and economic growth.

CMHC Vancouver forecast. (CMHC)

The Total number of new housing starts — new construction — could be of the order of 11,925 units of 17,710 units in 2020, 15,290 units 23,475 units in 2021, and 16,050 units 24,060 units in 2022. In comparison, there were 23 404 unit starts in 2018, and 28,141 in 2019.

Before the pandemic, sales of the activity on the construction of new recovering from the recession induced by the government’s interventionist policies, but the effect of COVID-19 for the delay of this recovery.

CMHC Vancouver forecast. (CMHC)

As for home prices, there will be a gradual price decline over the next two years, before the beginning of a recovery by the end of 2022.

A contraction of activity in the resale market is also planned, which will see a slow pace for the rest of 2020, with a recovery starting some time in 2021.

Total home sales is expected to reach 27,290 units 29,515 units in 2020, 25,590 units of 29,800 units in 2021, and 27,100 units 32,370 units in 2022. This represents a decrease of 33,057 unit sales in 2018 and 33,535 in 2019.

The average price of homes reached $966,866 in 2018 and $923,195 in 2019. But COVID-19 severe economic impact can send in an average home, the price: $893,000 to $919,000 in 2020, $828,000 to $889,000 in 2021, and $809,000 to $889,000 in 2022.

cmhc vancouver forecast

CMHC Vancouver forecast. (CMHC)

“The average price of the houses decrease with the lowest household budgets and the uncertain nature of the economy is reopened,” the report says.

“In addition, the uneven impact on the buyers at different income levels will result in a change of the share of condominiums and single-family homes for sale, creating an additional uncertainty for the path of the average price to the downside.”

In the rental housing market from the CMHC indicates that there is a possibility of an increase in vacancy rates in the short term — an increase of the historical regional vacancy rate low of 1% before the pandemic. This represents both the increase of the supply of housing, due to the decline in demand, as well as the increase in new purpose-built rental starts.

“The bulk of the job losses has been borne by younger workers who are less likely to have accumulated savings necessary to purchase,” the report says.

“The same thing is true of the growth of the population of the Vancouver CMA, which is largely driven by the influx of young migrants, most of whom are immigrants to Canada. The immediate decrease of the migration to Vancouver is expected to reduce the rental request directly.”

Metro Vancouver home price history

Metro Vancouver real estate prices of the story of the 1977 to 2019. (Real Estate board of Greater Vancouver)

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