As Canada continues to navigate the COVID-19 pandemic and take extreme measures, including physical distancing, to stop the spread of the deadly virus, every industry continues to be impacted, including Canada's housing market, which experts say will experience a significant "pullback" and "slow to a crawl this spring."
According to a new report from RBC, Canada’s housing market could see a 30% decline in home resales this year, hitting a 20-year low of 350,000 units due to both physical distancing restrictions and economic uncertainty caused by the coronavirus outbreak.
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This comes as many major real estate associations have called for the end of open houses and agents and brokers are turning to virtual home tours and digital tools to keep businesses running as close to normal as possible.
RBC bank analyst Robert Hogue says he expects housing activity to resume once the outbreak is under control and authorities lift containment measures. However, Hogue says the timing of this is uncertain, but RBC is "pencilling" in early-summer as the restart date.
"We think the recovery will come in stages—taking buyers up to a year to regroup and rebuild confidence amid high unemployment," says Hogue.
Houge said he also expects Canada’s composite benchmark prices to fall briefly over the second half of 2020 by an average of 2.9% year-over-year. However, he believes the outlook will improve next year in most markets, with "exceptionally low interest rates, strengthening job markets, and bounce-back in in-migration will generate substantial tailwind. "
In turn, Hogue projects home resales to surge more than 40% to 491,000 units in 2021, which is reassuring, to say the least.
And while up to a 30% decline across the country is substantial, Hogue says the outlook is "bleaker" for housing markets in oil-producing regions where the plunge in oil prices will further deepen and prolong economic hardship.
"Price declines are bound to re-accelerate significantly in Prairie markets. High inventories have been an issue for some time and the situation is likely to get worse. We see little prospects for prices to rebound anytime soon," said Hogue.