If homeowners can just hold off selling, the Canadian housing market will emerge fine from its current “deep freeze”.

According to a recent TD Economics housing forecast update, the market is expected to gradually recover from the effects of the COVID-19 pandemic.

After an anticipated “historic” plunge in sales in the month of April 2020, a “much stronger activity” is seen next year.

A lot of that depends on whether homeowners can avoid distressed selling during this pandemic.

“Absolutely key to our forecasts is the assumption that listings mirror sales by dropping substantially in the near-term and recovering gradually thereafter,” Rishi Sondhi, an economist with TD Economics, wrote.

By holding off on selling, homeowners can do one thing for the market.

“This puts a floor on prices and sustains relatively tight-supply demand balances across most markets, allowing for the resumption of positive price growth as provincial economies are re-opened,” Sondhi explained.

So far, home sales and listings across Canada, based on March 2020 figures, are on the same path.

According to the Canadian Real Estate Association, sales in March dropped 14.3 percent compared to February.

Listings of homes for sale decreased 12.5 percent in March from February figures.

Sondhi noted that listings are not expected to match the trend in sales “one-for-one”.

“Indeed, we anticipate the gap between listings and sales to grow in coming months, as financial stresses force some homeowners to list their properties,” Sondhi wrote.

But there are things going on the favour of homeowners, such as the six-month mortgage deferrals being offered by banks.

This, “combined with a jobs market that will likely improve starting next month, will limit number of households pressed into liquidating their homes”, Sondhi stated.

“Next year should see much stronger activity, as markets benefit from significant pent-up demand and historically low interest rates,” Sondhi also wrote.

According to Sondhi, sales are expected to rise by 50 percent, “paced by a strong gain in BC, where economic growth is likely to be relatively strong”.

“On the opposite end, a muted recovery (owing to the oil shock), will keep sales levels relatively low in the oil-producing provinces,” Sondhi pointed out.

Sondhi qualified that these latest forecasts are “subject to an extremely high degree of uncertainty”.

According to the TD economist, a “sharper-than-expected hit to the job market from the pandemic presents the most clear and present danger to the outlook”.

“To the extent that household balance sheets sustain deeper and more prolonged negative impacts, housing demand will come under much greater pressure and distressed selling could intensify,” Sondhi wrote.

For the moment, it’s a waiting game.

“The virus has put housing markets across the country in a deep freeze, with both buyers and sellers moving to the sidelines, awaiting the COVID-19 storm to pass,” Sondhi noted.

With interest rates at a record low, sales could recover stronger than anticipated, the economist stated.

“This could lead to stronger price gains, particularly if supply/demand balances generally hold up through the pandemic, as we expect,” Sondhi wrote.