![\"downtown](\"https:\/\/www.livabl.com\/articles\/wp-content\/uploads\/2020\/11\/downtown-condos-canada-housing.jpg\")
<\/a>Photo: James Bombales<\/em><\/p>\nDowntown condo markets in Canada\u2019s biggest cities are in for a tough final stretch of 2020 and there\u2019s little reason to believe that fortunes will shift quickly in early 2021.<\/p>\n
RBC Senior Economist Robert Hogue recently wrote that urban condo markets are \u201cthe weak spot\u201d in the country\u2019s housing picture despite exceptional results seen in October at the national level. The strength last month was largely based on high-flying single-family home sales and price gains.<\/p>\n\n
And the outlook for 2021 remains challenging, according to Hogue, who believes downtown condo prices will decline further in the near-term as investors continue selling their units after being faced with declining rental cash flows thanks to a newly well-supplied long-term rental market.<\/p>\n
\u201cWith immigration largely stalled and unemployment remaining high among lower-income Canadians, we see little that will boost rental demand in short order,\u201d Hogue wrote.<\/p>\n
In turn, soaring condo supply is leading to buyer\u2019s market conditions, particularly in Toronto and Vancouver, he added.<\/p>\n
But even with a bumpy road ahead, there are reasons to be optimistic. First, Capital Economics\u2019 Stephen Brown wrote recently that the weakness in condo prices<\/a> is unlikely to weigh on home prices at the national level.<\/p>\n Brown pointed out that the Teranet-National Bank Home Price Index \u2014 the gold standard in monitoring Canadian home prices \u2014 still shows prices appreciating in both Toronto and Vancouver, despite surges in condo listings.<\/p>\n \u201cThis underscores our view that, while condo prices could weaken, the downtown condo markets are too small to hold back national house price inflation,\u201d he wrote.<\/p>\n