It’s been several months since COVID-19 sent the Canadian economy into a tailspin. As we begin to re-open, many questions remain unanswered, including the fate of the Canadian housing market.

So far, here’s what we know. Sales activity has collapsed, falling by about 50% in April, with a similar figure expected in May. However, despite the unemployment rate nearly tripling, sales activity is arguably better than most would have anticipated at the beginning of the shut-downs. Meanwhile, sellers have refrained from listing their homes, with the number of new listings falling by roughly the same as sales. This has ultimately helped to keep inventory levels in check, and has supported prices for now. For now, it appears the damage has been kept in check.

This has bolstered some confidence in the market, with homebuyers flocking to detached houses further out from the city core, as home buying preferences shift to more space and better affordability. A decision which has been made easier around the idea of working from home more frequently. This has impacted the downtown condo markets where space and affordability has become a concern. Indeed, consumer behaviour has changed remarkably in the matter of a few months. Will this trend hold?

New listings are finally starting to ramp up, in Toronto new listings have been increasing for seven consecutive weeks, and are now getting close to their pre-covid highs at the beginning of March. It’s a similar story in Vancouver, where new weekly listings just hit a new high for this year. Supply is coming, will there be enough buyers there to absorb the new inventory?

Of course this largely hinges on an economic recovery, which also hinges on containing the spread of the virus. Per the OECD (Organization for Economic Co-operation and Development) there are two possible scenarios. One in which the virus is brought under control, and one in which a second global outbreak hits before the end of 2020. If a second wave of infections is avoided, global economic activity is expected to fall by 6% in 2020 and OECD unemployment to climb to 9.2% from 5.4% in 2019. If a second outbreak occurs triggering a return to lockdowns, world economic output is forecast to plummet 7.6% this year, before climbing back 2.8% in 2021. At its peak, unemployment in the OECD economies would be more than double the rate prior to the outbreaks, with little recovery in jobs next year.

In Canada, under a single-hit scenario, the OECD is forecasting an 8% decline in GDP. Under a second wave scenario, GDP would contract by 9.4% for the year.

Of course this then begs the question, what exactly quantifies as a first and or second wave? Currently, global cases added per day is reaching fresh new highs. Several days ago, the United States, excluding New York and New Jersey,  had the most daily cases since May 1st. Is this still the first wave?

Under current conditions, it’s hard to fathom how Governments can put an end to stimulus programs. As of June 04th there are 15.4 million Canadians collecting CERB.  In addition, 15% of all mortgages are in deferral. How long can they delay an inevitable spike in foreclosures?

How can we reliably forecast house prices when the goal posts are constantly moving and governments are inventing new and once considered unfathomable policies on the fly. The range of future outcomes have never been so wide. Humans crave certainty, It is therefore hard to fathom that home buying activity will make a sustainable recovery to levels once seen before the outbreak.

We shall see.

Three Things I’m Watching:

1. The OECD expects Canadian GDP to decline by 8% in 2020, with further downside to 9.4% in the event of a second wave.

2. Per CIBC, lower credit score borrowers are more likely to defer their mortgage, although they represent a small share of total mortgages being deferred.

3. Weekly new listings for Greater Vancouver recently hit a new high for the year.


  1. Your number of Canadians receiving CERB sounds wrong to me. 15.4 million Canadians is approximately equal to the number of full-time workers in Canada before the pandemic. Is this actually correct, a typo, or can you elaborate on what you mean by this?


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