CMHC’s gloomy outlook “unrealistic” Realtors say
June 2, 2020
Canada Mortgage and Housing Corp. (CMHC) released a doomsday-style housing forecast May 27 that envisioned a collapse of the housing market with national sales dropping up to 29 per cent, starts plunging 50 per cent to 70 per cent and average house prices dropping as much as 18 per cent with no real recovery until 2022.
“Canada will see a historic recession in 2020 with significant falls in indicators of the housing market,” stated CMHC's Housing Market Outlook special edition spring 2020.
Bob Dugan, CEO of CMHC, was quick to add the disclaimer that “this housing outlook is subject to unprecedented uncertainty due to the pandemic” during a conference call with media.
CMHC’s uncertainty about its forecast is well-placed, according to residential industry experts, who say there are early, positive signals that the current downturn could be brief—if brutal.
“We are already seeing inquiries from homebuyers up 5 per cent from pre-COVID levels,” said Elton Ash, Western Canada executive vice-president for Re/Max. Ash noted that the high level of housing sales at the start of this year is an indication of coiled demand that will lead to a quicker recovery than most expect. Ash is particularly bullish on Metro Vancouver, noting benchmark home prices increased in April and May—compared to a year earlier—even as sales crashed in the face of the pandemic.
“To see the price drop that CMHC is suggesting is unrealistic,” Ash said. He sees downward price adjustments of perhaps 5 to 10 per cent, depending on the region.
“Yes, there has been some economic pain, but not to the extent that CMHC is suggesting,” he said.
Brendon Ogmundson, chief economist of the BC Real Estate Association, is also confident that the “resiliency” of homebuyers will lead to recovery later this year, following the plunge in housing sales with the arrival of COVID-19.
According to early data from real estate boards, housing sales in the first two weeks of May were up about 20 per cent from April.
Ogmundson said home prices will remain fairly stable because the number of homes for sale has declined nearly 25 per cent because of social distancing. In April, he added, the benchmark provincial home price was 7.8 per cent higher than in April 2019.