Here's how CMHC thinks COVID-19 will impact Vancouver's real estate market
VANCOUVER -- A report from the Canada Mortgage and Housing Corporation forecasts lower housing starts, sales and prices for the country's major markets – and a slower rebound in Vancouver than in some other cities.
The latest outlook, released Tuesday morning, looks at the impacts of the COVID-19 pandemic so far, and estimates when things may return to normal. Scroll down to read through the full report, including information on other markets.
Senior analysts Braden Batch and Eric Bond wrote that housing starts in B.C.'s most populous city are expected to "contract significantly in the immediate future."
While B.C.'s approach to the novel coronavirus pandemic has allowed for construction, new builds will be challenged by reduced migration from Canada and abroad, the Vancouver market forecast says.
Additional factors impacting housing starts are increased unemployment and uncertainty regarding long-term economic impacts of COVID-19.
Prior to the pandemic, the report says, the construction industry had been operating at or near capacity. Still, the CMHC said, there was a decline in construction activity even before the pandemic.
The corporation expects things to pick up again toward the end of the year.
Sales and price recovery
CMHC expects a contraction of the resale market, but forecasts a recovery period starting next year.
Resale activity was "largely suspended" early on in the pandemic, and listings declined at that time as well.
Sales had slowed down in 2018-19, but were starting to pick up again before the pandemic. COVID-19 is expected to delay the recovery, the CMHC report says.
And those who are looking to sell may be getting less for their homes for the time being.
"A price decline will occur, but it will take place more gradually over the next two years before showing some recovery in late 2022," the report says.
The CMHC report forecasts average house prices declining due to residents' reduced incomes.
There's been an uneven impact on buyers of condos and detached houses, the corporation says, so there's "additional uncertainty for the path of the average price decline."
While most markets are expected to see homes selling for less, CMHC says prices may return to normal earlier in Toronto, Montreal and Ottawa. Vancouver, Edmonton and Calgary should expect a slower rise back to pre-pandemic prices, it says.
While owners may be worried about the impact of the pandemic, those in the rental market have been more directly impacted so far.
CMHC says the rise in unemployment and sudden, lengthy border closures are hitting the more sensitive rental market harder.
Buyers tend to be older than renters, and less likely to have lost their jobs, the report says.
Last week, B.C. Finance Minister Carole James said those most impacted have been the province's lowest earners: young people and women.
Women are 25 per cent more likely to have lost their job than men, and the youth unemployment rate reached 29 per cent, according to the latest data.
Young people are less likely to have accumulated enough savings to buy in Vancouver, and the rental market is "largely driven by the influx of young migrants," the report says. Many of these migrants are immigrants to Canada.
The border closure was expected to have a direct impact on the demand for rentals.
The report includes information on other major Canadian markets. Read through the full 18 pages below.