![\"canadian-home-prices\"](\"https:\/\/www.livabl.com\/articles\/wp-content\/uploads\/2020\/09\/canadian-home-prices.jpg\")
<\/a>Photo: James Bombales<\/em><\/p>\nCanada\u2019s housing market mounted an impressive comeback after the springtime freeze, but a prolonged period of high unemployment and lower incomes will eventually sap the market\u2019s current vigour.<\/p>\n
That\u2019s the message from Moody\u2019s Analytics Economist Abhilasha Singh, who authored the economic research firm\u2019s quarterly assessment of the Canadian real estate market.<\/p>\n\n
In the report, published this week, Singh wrote that a combination of government stimulus, mortgage deferrals, low interest rates and strong demographics have kept the housing market afloat during the pandemic thus far.<\/p>\n
But despite the promising \u201cburst\u201d of job gains happening in the third quarter, Canada\u2019s employment picture will remain dire at the end of the year, with joblessness exceeding nine percent.<\/p>\n
Singh expects the economic recovery\u2019s momentum to fade by early 2021, marking the point when the full weight of the pandemic will be finally felt by the Canadian housing market.<\/p>\n
\u201cThe housing market will no longer be able to escape the poor condition of the labor market as vacancy and delinquency rates rise in 2021,\u201d she wrote.<\/p>\n
\u201cHigh unemployment and lower income will restrain buyers\u2019 return to the market. So will affordability issues in Vancouver and Toronto. Further, slower in-migration flows to Canada due to COVID-19 disruptions will weigh on housing demand. Not even lower interest rates will be enough to save the housing market,\u201d she added.<\/p>\n
Singh wrote that Moody\u2019s Analytics\u2019 baseline scenario would see Canadian home prices experience a seven percent peak-to-trough decline. The effects would not be evenly distributed across the country. Major markets in oil-producing regions, like Calgary and Edmonton, are considered to be most vulnerable. Condo and rental segments in the expensive Toronto and Vancouver markets will be more adversely affected than the lower density areas located outside their urban cores.<\/p>\n
While this is a hefty dose of gloom following the market\u2019s remarkable summer recovery, Singh said that, fortunately, the price declines will be brief.<\/p>\n
\u201c[T]he restoration of robust job growth in 2022 along with Canada\u2019s strong demographics will put a floor under the housing market which mitigates the degree of the declines,\u201d she wrote.<\/p>\n
With the worst price effects confined to 2021, Singh said that prices will \u201cmeaningfully\u201d recover beginning in early 2022.<\/p>\n
Canada\u2019s housing market mounted an impressive comeback after the springtime freeze, but a prolonged period of high unemployment and lower incomes will eventually sap the market\u2019s current vigour.<\/p>\n","protected":false},"author":5,"featured_media":208462,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","apple_news_api_created_at":"2020-09-25T20:34:05Z","apple_news_api_id":"2608e6fb-3789-4eb8-b609-95e11e9c8f46","apple_news_api_modified_at":"2020-09-25T20:34:06Z","apple_news_api_revision":"AAAAAAAAAAD\/\/\/\/\/\/\/\/\/\/w==","apple_news_api_share_url":"https:\/\/apple.news\/AJgjm-zeJTri2CZXhHpyPRg","apple_news_coverimage":0,"apple_news_coverimage_caption":"","apple_news_is_hidden":false,"apple_news_is_paid":false,"apple_news_is_preview":false,"apple_news_is_sponsored":false,"apple_news_maturity_rating":"","apple_news_metadata":"\"\"","apple_news_pullquote":"","apple_news_pullquote_position":"middle","apple_news_slug":"","apple_news_sections":["https:\/\/u48r14.digitalhub.com\/sections\/09b86915-7d2b-3acd-915b-b215002d01b7"],"apple_news_suppress_video_url":false,"apple_news_use_image_component":false,"footnotes":""},"categories":[11269],"tags":[],"coauthors":[8652],"apple_news_notices":[],"yoast_head":"\n