The COVID-19 pandemic has introduced unprecedented uncertainty to economic and housing outlooks.
This special edition of the Housing Market Outlook presents an account of the preliminary economic impacts of the pandemic. It delivers the insights you need in times of great uncertainty. The forecast examines a wide range of plausible scenarios for housing indicators including:
- housing starts
- home sales
- house prices
Housing Market will see a historic recession in 2020
The national and provincial economic outlook is subject to considerable risk given the:
- rapid evolution of COVID-19 and duration of the pandemic
- speed at which the global economy and financial markets are reacting
- significant regional disparities in economic impact on housing markets
Canada will experience a historic recession in 2020 with significant declines in all housing indicators. Severe loss in household income and employment, and migration at a standstill contribute to unprecedented falls in construction activity and sales. The decline in housing activity is compounded in oil producing provinces as the energy sector is also experiencing historic lows.
Following declines in 2020, housing starts, sales and prices are expected to start recovering by mid-2021 as the pandemic recedes. Sales and prices are still likely to remain below their pre-COVID-19 levels by the end of 2022. The precise timing and duration of the recovery is highly uncertain, as the trajectory of the pandemic is not known.
Housing starts will decline
Residential construction activity slowed in many provinces, particularly in Quebec and Ontario driving a decline in national housing starts in 2020.
Housing starts will likely see a decline of 51% to 75% in the second half of 2020 from pre-COVID-19 levels before starting to recover in the first half of 2021 as economic conditions improve.
Housing starts are not expected to rebound to pre-COVID-19 levels by the end of the forecast horizon.
We’ll see a drop in existing home sales
Large declines in employment and household disposable income will cause large reductions in demand for existing homes in 2020. Listings will fall in response to weaker demand, placing significant downward pressure on existing home sales.
Sales are likely to register a decline in the range of 19% to 29% from their pre-COVID level before beginning a slow, gradual recovery in 2021. Our forecasts indicate that sales are not likely to recover to pre-COVID-19 levels by the end of the forecast horizon.
Housing prices will dip but recover in 2021
Our forecasts indicate that the average MLS® price will decline by 9% to 18% from its pre-COVID-19 level. Prices will begin to recover in the first half of 2021.
Provincial Housing Market Outlook declines
Housing indicators in Alberta and Saskatchewan are more heavily weighted to the downside than for other provinces. The negative impacts of lower oil prices put additional pressure on housing markets in these provinces.
Manitoba is likely to see smaller declines in housing indicators than the other Prairie Provinces, being affected less by oil prices.
The outlook is broadly similar for Ontario, Quebec and British Columbia. However, British Columbia is likely to see relatively smaller declines in housing starts in 2020 and 2021, while Ontario is likely to see larger declines in sales and prices in 2020.
Atlantic provinces will see relatively smaller declines in housing indicators when compared to other regions, as economic conditions will decline modestly compared to other regions. Due to the highly uncertain forecasting environment, we continue to closely monitor city-level housing markets and will provide additional analysis and guidance once sufficient data is available.
This is from the Housing Market Outlook series.