Less than a year ago, the former president and CEO of Canada Mortgage Housing Corporation (CMHC) oversaw the release of a dire national housing forecast that predicted national home prices could plummet between 9 and 18% in the wake of COVID-19. It was an alarming forecast that industry professionals called, among other things, "fear-mongering" and “panic-inducing and irresponsible.”

In just under 12 months, Canada's housing market continues to defy that initial forecast, with home prices already having jumped more than 30% to date, and suburbs, smaller cities, and rural areas all helping to lead the way.

In 2020, total sales outpaced total new listings as the existing-home market recovered, supporting overall price growth. At the same time, sales growth has been more robust for relatively more expensive single-detached units, as households sought larger homes as they adapted to the work-from-home phenomenon, further supporting overall average price gains.

While April housing sales data showed moderate cooling in some of Canada's largest markets, there's nothing to suggest that prices will follow a similar path.

READ: Month-Over-Month Data in Canada’s Hot Housing Market Tells a Cooler Story

And now, CMHC is changing its tune -- predicting that national home prices will continue on their upward trajectory, and indicates that the average selling price of a home could increase 14% to $649,400 in 2021, from $567,699 last year. The national housing agency also forecasts property resales could climb as much as 9% to 602,300 units over the same period.

In comparison, the Canadian Real Estate Association (CREA) said it expects nearly 702,000 properties to change hands through Canadian MLS systems in 2021, up from the 551,262 recorded in 2020, while sales for 2022 may reach 614,000.

The association also said it expects the average Canadian home price to rise by 16.5% annually to just over $665,000 in 2021 and $679,341 in 2022 -- this is notably higher than the 12.9% increase recorded in 2020.

“COVID-19 has had unprecedented impacts on Canada’s urban centres. While large parts of the economy have struggled to adapt to pandemic conditions, housing activity has recovered reflecting pent-up demand, adjustment of working practices by many to pandemic conditions, and lower mortgage rates," said CMHC chief economist Bob Dugan.

"Economic conditions are expected to return to pre-pandemic levels by the end of 2023, if broad immunity to COVID-19 takes hold by the end of 2021. This includes the pace of home sales and prices, which we expect to see moderate from 2020 highs over the same period. However, significant risks remain with respect to the path, timing and sustainability of the recovery," said Dugan.

In the CMHC's latest spring housing market outlook, the national housing agency reiterated the uneven distribution of the economic impacts of the pandemic on Canadians. Amid the pandemic, higher-income households were generally able to maintain their jobs as they adapted to working from home. At the same time, those employed in lower-paid industries have been less able to adapt to pandemic conditions.

READ: 2021 to Be Another Record-Setting Year in Canadian Real Estate: CREA

"Low mortgage rates, high savings rates and persistent, uneven impacts of the pandemic and low immigration are forecast to continue to support sales of more expensive housing types while limiting rental demand," CMHC said in its outlook.

CMHC says existing home sales and price growth will moderate from the unsustainable 2020 pace of increase but will remain elevated. The ratio of single-detached starts to total starts is also expected to increase, reflecting the shift in preference toward single-detached units on the resale market, as indicated by their current low inventories and strong price growth.

The outlook shows steady rises in home values, with the low end of its forecast seeing the average price up 11% to $628,400 this year and then increasing by 3.7% to $651,600 in 2022 and 2.7% to $669,500 the following year. At the high end, CMHC predicts home price acceleration slowing from 14% ($649,400) this year to 5% to $676,500 in 2022 and then 4% to $704,900 in 2023.

“The pace of sales is expected to moderate from recent highs, reflecting the impact of increasing mortgage rates and high price levels on existing-home markets,” the agency said.

When looking at some of Canada's largest housing markets, CMHC says by late 2021, the pace of rising home prices will slow from the 2020 highs. While the rate of prices won't necessarily increase as quickly, prices will still stay high.

In Vancouver, prices are forecast to reach either a low of $1,036,000 or a high of $1,129,000 in 2021, followed by a low of $1,041,000 or a high of $1,267,000 in 2022 and a low of $1,025,000 or a high of $1,395,000 by 2023.

Home sales follow a similar path. Vancouver could see resales reach a low of 44,600 or a high of 50,000 in 2021, followed by either a low of 39,400 or a high of 46,000 in 2022 and a low of 37,900 or a high of 44,700 in 2023.

As for Canada's largest city, CMHC says strong house price growth is expected in 2021, with more modest, single-digit, price growth expected in 2022 and 2023.

Like Benjamin Tal, deputy chief economist at CIBC, previously said, “If you think Toronto is unaffordable now, you wait.”

In 2021, Toronto could see average prices across all home types reach a low of $962,500 or a high of $1,087,600. The following year, average prices could rise slightly to a low of $998,700 or a high of $1,151,400, while 2023 could see average prices reach a low of $1,024,700 or a high of $1,205,400.

CHMC expects existing-home sales in the GTA will remain strong for the rest of 2021, with resales reaching a low of 98,600 or a high of 113,500. CMHC says resilient employment in high-paying industries, historically low mortgage rates, and increased household savings rates will support demand.

However, sales are expected to slow down in 2022 as the rapid pace of homebuying in 2021 eases and homebuyers adjust to rising mortgage rates, with resales forecast to reach either a low of 95,500 or a high of 114,000.

Homebuying activity is expected to pick up again in 2023, with resales expected to reach a low of 102,400 or a high of 123,800 as the global economy fully recovers, resulting in heightened international migration and employment growth.

Given how unpredictable the pandemic has been, CMHC's outlook could vary differently in the months to come. Ultimately, some big risks could shift the outlook's course, including a slower-than-expected vaccine roll-out that could prolong the pandemic and more robust than expected inflationary pressures, potentially leading to higher mortgage rates, among other risks.

The national housing agency says its outlook is "highly dependent" on the broad immunity to COVID-19 by the end of 2021. However, other factors that could influence the outlook include the savings rate remaining above pre-pandemic levels and mortgage rates gradually increasing.

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