Housing industry players are opposing Canada Mortgage and Housing Corporation’s dire forecast of an 18% decline in home prices over the next 12 months, claiming that demand remains elevated and inventories continue to hover near record lows.
“Assuming that demand continues its current course, Canadian real estate prices will likely remain relatively stable or experience a single-digit price correction at worst,” RE/MAX said, adding that its agents are still reporting multiple offers on a regular basis.
“CMHC doesn’t seem to understand the sheer number of sellers that would have to accept this kind of price reduction, in order for average housing prices to plummet to this degree in such a short time span,” said Christopher Alexander, executive vice president and regional director with RE/MAX of Ontario Atlantic Canada. “Sellers simply won’t accept that kind of discount on their listings. A statement of this nature is panic-inducing and irresponsible.”
Government agencies should instead focus on how the housing markets – and the Canadian financial system as a whole – could weather the unprecedented impact of the coronavirus, according to the C.D. Howe Institute.
“Ottawa and the provinces need to recommit to fiscal and monetary anchors in light of the unprecedented stimulus response provided by all levels of government and the Bank of Canada throughout the COVID-19 crisis,” C.D. Howe said. “Canada is emerging from the first wave of the pandemic with very high public and private debt loads and is increasingly dependent on domestic and foreign investors to finance them. With the loss of Canada’s fiscal anchor, maintaining investor confidence so that public and private debt can be carried at a reasonable cost is essential.”