The Canadian Mortgage and Housing Corporation (CMHC) has recently released a forecast for the remainder of 2020 and 2021. According to the report, house prices could further decrease between 9% to 18% compared to the first quarter of 2020, with no sign of recovery until at least the following year. Some regions which are heavily dependent on commodity revenue such as oil, could see home prices drop by up to 25%.
Furthermore, the most pessimistic scenario could see that currently mounting mortgage deferrals could translate to increased foreclosures, further devastating the housing market and economy as a whole.
Before the coronavirus pandemic, the average house price was approximately $540,000, now however, the average could drop to anywhere between $493,000 and $518,000. Furthermore, the CMHC is anticipating the construction of new homes to slow down drastically, with housing starts decreasing by 75% due to construction activity restrictions. A recovery is not likely until at least the second quarter of 2021. In the meantime, the CMHC is forecasting home sales to drop by 29%, with no recovery in sight until 2022.
Information for this briefing was found via CBC News and the Canadian Mortgage and Housing Corporation. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.