A home’s value could drop by as much as 15% in the next two years
By Erika Morris
According to projections by the global credit ratings agency DBRS Morningstar, Canada’s housing market is set to take a hit post-pandemic, with prices plunging over the next two years anywhere between 10% and 15%.
Factors influencing the projections include the spike in unemployment and mortgage deferrals. DBRS analysts said more Canadians will fall behind on their mortgage payments in all 10 provinces, though Alberta, Saskatchewan, and Newfoundland and Labrador will be hit hardest due to oil prices plummeting.
The Canada Mortgage and Housing Corp. said on May 5 said that about 10% of homeowners have asked to defer their mortgage payments. The Crown corporation also projected that the country’s housing market won’t realistically return to its pre-pandemic state until late 2022—at the earliest.
DRBS analysts also looked at home sales, which fell by 14% from February to March—and that was before everything shut down. The numbers will be even higher by the end of April, with over 3 million Canadians being out of work.
Toronto and Vancouver have become Canada’s most expensive cities, with sharp rises in housing prices over the last few years. Even in a moderate scenario, according to DBRS Morningstar, Toronto’s housing market will take a hit of about 14%.
The Toronto Regional Real Estate Board saw home sales in the Greater Toronto Area specifically plunge by 67% in April, while the Real Estate Board of Greater Vancouver said sales fell by almost 40%. Average sale prices in Toronto dropped by 2.5% from a year earlier.
The debt-to-disposable income ratios have also risen exponentially, by 176%.
Unemployment rates, immigration, mortgage payments, and the construction industry are all expected to play a part in rebuilding the housing market.