Toronto home prices not expected to bounce back till 2022 - Toronto Star

Canada Mortgage and Housing Corp. (CMHC) is predicting Toronto home prices could bottom out at between 7 per cent and 18 per cent below where the average price of a home stood at the end of the first quarter of this year, which was $892,000.

That was just before businesses and activities were locked down for the pandemic.

It is expected to take until late in 2022 for Toronto prices to return to those levels, according to a CMHC forecast released Tuesday.

Its Housing Markets Outlook for urban centres follows a national forecast in May that predicted Canadian home prices would drop between 9 and 18 per cent.

In Toronto, CMHC expects average prices to land in the range of $735,421 to $831,075 in the second quarter of next year.

The low number represents a pessimistic outlook in the event that the economic recovery is hampered by continued high unemployment or another wave of COVID-19. The higher number is the top range of the forecast for that quarter, which would depend on a faster recovery.

This year, which started strong, is expected to end with average prices ranging between $778,748 and $843,724. By the end of the fourth quarter of 2022, CMHC says the city’s home prices will have recovered, with the forecast ranging from $796,349 in the worst-case scenario to $912,828 if the recovery is relatively unimpeded.

The deep uncertainty around the impacts of COVID-19 led CMHC to forecast a range of price, sales and housing construction outcomes, said Aled ab Iorwerth, deputy chief economist.

“Both the future path of the virus and the extent and pace of the economic recovery are unknown. This uncertainty extends to the global economy, which is a critical source of demand for Canadian exports,” he said on a conference call with reporters.

“This means households will delay making decisions on purchasing or listing properties,” said ab Iorwerth.

Even if the pandemic drags on, Toronto’s “heavy concentration of office-based companies will enable a greater number of employees to work remotely,” said the CMHC analysis.

“Short-term job losses will occur primarily in the retail and hospitality industries, which typically employ lower-paid workers,” it said.

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Because those workers are more likely to rent, their circumstance will likely have less impact on the home ownership market.

An increased supply of purpose-built rentals and condos will loosen Toronto’s historically high vacancy rates. At the same time, CMHC predicts a softer demand for rentals due to the uncertain job market that causes some younger adults to remain with their parents or in shared housing arrangements. Lower-than-expected immigration levels and interprovincial migration will also dampen demand.

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But any relief in vacancy rates in big cities such as Toronto will likely be short-term because the overriding demand persists, said ab Iorwerth.

He said there is also “a lack of clarity on what will happen with short-term rentals.” The drop in tourism has caused some operators to put their properties on the long-term rental market or to list them for sale.

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https://news.google.com/__i/rss/rd/articles/CBMiamh0dHBzOi8vd3d3LnRoZXN0YXIuY29tL2J1c2luZXNzLzIwMjAvMDYvMjMvdG9yb250by1ob21lLXByaWNlcy1ub3QtZXhwZWN0ZWQtdG8tYm91bmNlLWJhY2stdGlsbC0yMDIyLmh0bWzSAQA?oc=5

2020-06-24 00:40:53Z
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