Virus effects on housing worse in oil sector: CMHC

SASKATOON Canada’s mortgage insurer says the pandemic has led to an “unprecedented downturn” in the housing market, with the oil-producing provinces of Saskatchewan and Alberta facing more significant effects.

The Canada Mortgage and Housing Corp. (CMHC) released its national Housing Market Outlook on Wednesday. It says COVID -19 has caused a historic recession, leading to decreases across all indicators of the housing market.

The decline is the greatest in Saskatchewan

and Alberta. The pandemic’s global effects have contributed to a decreased demand for oil and greater excess supply globally, with declining oil sector investment, employment and oil prices placing additional pressures on those provinces’ housing markets.

Average Canadian home prices will decline by nine to 18 per cent and housing starts by 51 to 75 per cent from PRE-COVID-19 levels, before beginning to recover in the first half of 2021, CMHC predicts.

The market could start to rebound by the end of the first half of 2021 with relaxed containment measures allowing the economy to reopen.

The speed of that recovery is unknown, as is whether future waves of infection could lead to further economic shutdowns. Sales and prices are likely to remain below PRE-COVID -19 levels by the end of 2022, the report predicts.

It’s too early to tell which end of the range the market is headed toward, said CMHC senior economist Bob Dugan. The difference between the two scenarios would be the duration of the COVID-19 downturn, he added.

Even with economic restrictions lifted and businesses reopening, social-distancing protocols would prevent a business-as-usual economy until the development of a vaccine, which experts say will take 12 to 18 months.