Residential Market Commentary - CMHC remains bearish
Canada Mortgage and Housing Corporation is maintaining its bearish outlook for home prices.
At the end of May CMHC said it did not expect to see prices (or sales, or housing starts) return to pre-pandemic levels until the end of 2022. Its latest report echoes that view.
CMHC’s most recent Housing Market Outlook focuses on six major urban centres: Vancouver, Calgary, Edmonton, Toronto, Ottawa and Montreal. Average prices in those cities range from a low of $359,000 in Edmonton to $962,000 in Vancouver, at the high end.
The agency’s best case scenario sees prices rising by 2% in Toronto, Ottawa and Montreal by the end of the fourth quarter of 2022. Vancouver, Calgary and Edmonton will suffer declines of 7%, 8% and 9% respectively.
The worst case scenario sees the eastern cities being hit with declines as deep as 14%, while the western centres could fall by as much as 24%.
Calgary and Edmonton are also fighting against the effects of a slumping energy industry.
The agency warns, though, that the forecast is “highly uncertain and will vary considerably.”
There are legitimate concerns about unforeseen, or unintended consequences. Highly subscribed mortgage deferral programs will start to expire later this year. If employment rates do not rebound in the meantime, many debt-burdened homeowners could find themselves without work, and unable to pay their mortgages, leading to a glut of forced sales and falling prices.
Realtors are taking a more optimistic view. The forecast from Royal LePage predicts a 1% price increase, with a worst case scenario of a 3% drop, nationally, by the end of this year.