In all the conversations about Canada’s high home prices over the last few years, no one predicted that a global pandemic would finally bring them down. While prices haven’t collapsed—the average cost of a home in Canada fell by 1.3 per cent year-over-year in April—some cracks are starting to appear. Last month, home sales fell by a record 57 per cent, while month-over-month prices declined by 10 per cent.
Desormeaux, a senior economist at Scotiabank. While people weren’t selling homes, no one was buying either. If demand fell, but supply stayed the same then you’d see housing prices drop. “It’s a different situation when one side of the market is disproportionately impacted,” says Desormeaux. “But here both supply and demand grinded to standstill at the same time.”
Ultimately, Scotiabank thinks that any decline will be short lived. It says that home prices will exceed pre-COVID-19 levels by mid-2021 and that housing markets in locales that were doing well before the pandemic, such as Toronto and Vancouver, will rebound faster than other cities. In its report, it says that fears about a housing correction are misplaced.