As we move into the final stretch of 2020, there will be no shortage of retrospectives that take stock of the profound changes the housing market has experienced as a result of the COVID-19 pandemic.
Early out of the gate is RBC Senior Economist Robert Hogue, who published an overview of seven ways the pandemic is affecting the country’s housing market.
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While not all of Hogue’s observations and takeaways focused on challenges facing the market, the economist didn’t mince words when describing the impact of COVID-19.
“In just months, the landscape of Canadian real estate has been shaken to its core,” he wrote. “Whether the changes are permanent or transitory is an open question, but one thing is certain, 2020 has been a year like no other for Canadian housing markets.”
To get a sense of what’s to come for the remainder of 2020 and the New Year, Hogue highlighted three areas that continue to be at the centre of discussions around the Canadian housing market’s prospects in the near and medium term.
Immigration slowed substantially this year due to the disruptive effects of the pandemic. Hogue pointed out that total net migration fell by 94 percent in the second quarter of the year, when the pandemic’s impact was felt most acutely. It’s also unlikely to rebound in the near future as border restrictions remain tight and the pandemic rages on.
With newcomers typically renting for years after they arrive in Canada, and then likely purchasing a starter home or condo, Hogue said the rental market and first-time homebuyer cohort could be feeling the wide-ranging repercussions of this immigration drop-off for years to come.
One bright spot announced after Hogue published his commentary Thursday is the Canadian government’s initiative to increase the immigration target for 2021 to 2023 to make up this year’s pandemic-induced shortfall.
Another source of instability Hogue flagged is the spike in condo listings seen in Toronto, Montreal and Vancouver. In Toronto in particular, stricter rules around Airbnb and other short term rentals have spurred many investor-owners to list their units at a time when new condo construction is trending at a near record-breaking level.
This week, research firm Urbanation reported that 5,411 condo units were set to be completed in the Toronto region in the fourth quarter, a record for this three-month period. This comes as condo resale listings in the City of Toronto rose 134 percent in September over the previous year.
Finally, Hogue said that a gloomy jobs outlook for many Canadians threatens to “unleash a wave of properties for sale.” So far, many homeowners who benefitted from mortgage deferrals through spring and summer have begun to make regular payments again.
But as the economy remains in a precarious position and broad swathes of the country endure an intense second wave of the pandemic, the ability of many Canadians to continue servicing their mortgages looks perilous.