Home prices are expected to decline by an average of $45,000 across Canada, according to the Canada Mortgage and Housing Corporation (CMHC).
As revealed by Blacklock’s Reporter, the housing market may not show its first signs of recovery until 2023.
“Following declines in 2020 housing starts, sales and prices are expected to recover by mid-2021 as the pandemic recedes,” a report titled Housing Market Outlook: Special Edition claimed.
“Sales and prices are still likely to remain below their pre COVID-19 levels by the end of 2022.”
CMHC estimates the average housing cost in 2019 was $479,300, but by next spring this will decline to $434,645.
When testifying before the House of Commons finance committee on May 19, CMHC CEO Evan Siddall estimated that 12% of Canadians who have mortgages will defer their payments in 2020.
“The resulting combination of higher mortgage debt, declining house prices and increased unemployment is cause for concern for Canada’s longer term financial stability,” said Siddall.
According to Siddall, the ratio of household debt as a share of GDP is a rising concern for Canada’s economic wellbeing.
“What’s going to happen is the musical chairs game is going to come to an end and young people who are very highly leveraged – in fact if they get an insured mortgage they’re borrowing at something like 83 or 85 to one, and that’s before they borrowed their down payment from their parents or from their RRSP or things like that,” said Siddall.
Even before the coronavirus pandemic, young people were facing grim prospects with regards to home ownership.
In a poll from December 2019, 46% of millennials claimed that owning a home in their lifetime was a “pipedream.”
Millennials were also skeptical that their homes would ever offer a return: 38% said that if they bought a home, it wouldn’t be worth as much as they paid for in the future.