Earlier this month, Canada Mortgage and Housing Corporation predicted a nine to 18 percent decline in average home prices over the next year.
CMHC made the forecast on June 4 when it announced that it is tightening lending standards.
On Tuesday (June 23), the federal housing agency released a report about its outlook for the 2020 summer housing market.
“House prices will likely fall because of uncertainty over the economy’s path,” CMHC declared about the prospect in major urban centres.
It noted sharp declines in employment big metropolitan areas on account of the COVID-19 pandemic.
“Such large employment and income declines, coupled with uncertainty over the future trajectory of the virus, will lower demand for housing in the urban centres,” according to CMHC.
In the Vancouver area, the housing agency expects resale of homes to “contract and remain low for the balance of 2020 and begin to recover in 2021”.
“A price decline will occur gradually over the next two years before showing some recovery late in 2022,” CMHC stated.
As well, construction of new homes in Vancouver will “contract significantly in the immediate future”.
Landlords will also feel the pinch.
“The immediate decline in migration to Vancouver is expected to reduce rental demand directly,” CMHC stated.
A June 15 report by Robert Hogue of RBC Economics indicated that benchmark prices of homes in Canada are forecast to fall seven percent by the middle of 2021.
However, Hogue stated that a “widespread collapse in property values is unlikely”.