The impact of the coronavirus outbreak on the value of Canadian housing will fully manifest by next year, according to economists with the Canadian Imperial Bank of Commerce (CIBC).
“The expected volatility in overall economic activity in the coming quarters will not skip the resale market,” said CIBC economists Benjamin Tal and Katherine Judge in a report last week. “By 2021, as the economics of housing returns to fundamentals, we expect an array of factors to result in a weaker market with some downward pressure on prices.”
Among the most influential of these factors is the already-weakening employment sector, latest Statistics Canada figures indicated.
The national market suffered a 5.3% decline from February to March, representing more than 1 million lost jobs. Meanwhile, the unemployment rate rose by a record high 2.2% monthly, ending up at 7.8%.
Tal and Judge said that this trend will almost certainly lead to much slower demand. Rapidly-depleting budgets might also force some homeowners to sell in a less-than-ideal market environment, The Financial Post reported.
“Overall, as the fog clears, we expect to see average prices 5%-10% lower relative to 2019 levels, with high-cost units in the high-rise segment of the market seeing the most notable price declines,” the economists said. “The cumulative damage suggests that when we recover, potentially at one point in 2021, we will be recovering into recessionary conditions.”