{"id":15593,"date":"2020-05-14T10:10:00","date_gmt":"2020-05-14T17:10:00","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=15593"},"modified":"2020-05-14T09:57:18","modified_gmt":"2020-05-14T16:57:18","slug":"national-housing-stronger-activity-to-resume-in-june","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2020\/05\/national-housing-stronger-activity-to-resume-in-june\/","title":{"rendered":"National Housing Stronger Activity to Resume in June"},"content":{"rendered":"<p style=\"text-align: justify;\">Housing sales, prices and starts across Canada will plunge this year and stay muted for at least a year, with Western provinces taking the worst hit, according to Moody\u2019s Analytics.<\/p>\n<p style=\"text-align: justify;\">Other analysts, however, see a more brief, shallow downturn that could reverse as early as June.<\/p>\n<p style=\"text-align: justify;\">\u201cThe COVID-19 pandemic along with the collapse in oil prices will create a perfect storm this year for both home sales and residential construction,\u201d according to Abhilasha Singh, an economist at Moody\u2019s Analytics who authored the Canada Housing Outlook, released April 30.<\/p>\n<p style=\"text-align: justify;\">The negative effect will be felt acutely in the West because of its economic makeup, the report states.<\/p>\n<p style=\"text-align: justify;\">\u201cBritish Columbia is most exposed in terms of leisure\/hospitality and trade, while the Prairie provinces\u2014which were already dealing with softening demand for energy\u2014are most vulnerable to the collapse in oil prices,\u201d Singh said.<\/p>\n<p style=\"text-align: justify;\">Moody\u2019s is forecasting a national contraction of the baseline GDP by 15% in the second quarter of 2020, compared to year earlier, while the unemployment rate will nearly doubles to 10%. This will cause housing starts to fall to 145,000 annualized units by the end of 2020, compared with 210,000 in early 2020.<\/p>\n<p style=\"text-align: justify;\">While the report highlights the \u201cextraordinary measures\u201d taken to lower lending costs, including slashing the Bank of Canada interest rate to 0.25% in March and a subsequent reduction in the five-year mortgage to below 3 per cent, it warns home buyers, worried about job losses, will remain sidelined.<\/p>\n<p style=\"text-align: justify;\">\u201cNot even lower interest rates will be enough to save the housing market,\u201d Singh said.<\/p>\n<p style=\"text-align: justify;\">As a result, Moody\u2019s Analytics expects Canadian home prices to suffer a peak-to-trough decline of about 10%.<\/p>\n<p style=\"text-align: justify;\">\u201cAs the outlook begins to improve in early 2021, house prices are expected to rebound,\u201d the report notes.<\/p>\n<p style=\"text-align: justify;\">Nationally, the composite house price index is forecast to decline 2.7% this year and 3.6% in 2021, but increase in 2022.<\/p>\n<p style=\"text-align: justify;\">In comparison, home prices in Metro Vancouver are forecast to drop 4.2% this year and a further 6% next year and continue to decline by 2% in 2022 before a tepid recovery three years from now.<\/p>\n<p style=\"text-align: justify;\">Calgary, which saw housing sales plunge 63% by mid-April compared to a year earlier, according to the Calgary Real Estate Board and RBC Economics, could suffer the worst house price decline in Canada.<\/p>\n<p style=\"text-align: justify;\">Moody\u2019s forecasts Calgary home prices falling 8.3% this year and 8.8% in 2021, though it projects a potential double-digit price increase by 2023.<\/p>\n<p style=\"text-align: justify;\">RBC Economics and the Canadian Real Estate Association (CREA) forecast a more shallow and shorter downturn in the housing market due to COVID-19 and its trailing economy malaise.<\/p>\n<p style=\"text-align: justify;\">CREA expects to see housing sales returning to a strong pace in 2021.<\/p>\n<p style=\"text-align: justify;\">\u201cThis will be a temporary shock,\u201d agreed Robert Hogue, of the macroeconomic and regional analysis group with RBC Economics, who says the recovery could start as early as mid-2020.<\/p>\n<p style=\"text-align: justify;\">\u201cWe expect stronger activity to resume once social distancing orders are relaxed. Our baseline assumption is sometime in June. Exceptionally low interest rates will help spur the recovery,\u201d Hogue said.<\/p>\n<p style=\"text-align: justify;\">\u201cOur current view is the recovery will stretch into 2021 in most markets,\u201d he added. \u201cOdds of a major price drop are still low.\u201d<\/p>\n<p style=\"text-align: justify;\">The exception to this rosy scenario is the Prairies, Hogue warns.<\/p>\n<p style=\"text-align: justify;\">\u201cThe plunge in crude oil prices are poised to further drive [Prairie home] prices lower,\u201d he said.<\/p>\n<p style=\"text-align: justify;\"><a href=\"https:\/\/biv.com\/article\/2020\/05\/house-prices-will-fall-10-recovery-moodys\" target=\"_blank\" rel=\"noopener noreferrer\">Moody&#8217;s : House Prices Will Fall 10% Before Recovery<\/a> by Frank O&#8217;Brien | Western Investor | BIV<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Housing sales, prices and starts across Canada will plunge this year and stay muted for at least a year, with Western provinces taking the worst hit, according to Moody\u2019s Analytics. &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2020\/05\/national-housing-stronger-activity-to-resume-in-june\/\">read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[],"class_list":["post-15593","post","type-post","status-publish","format-standard","hentry","category-market-updates"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>National Housing Stronger Activity to Resume in June &#8226; Rory C Real Estate | Oakwyn Realty<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.roryc.ca\/blog\/2020\/05\/national-housing-stronger-activity-to-resume-in-june\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"National Housing Stronger Activity to Resume in June &#8226; 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