Significant drops in employment in Canada’s major cities will keep downward pressure on housing demand, with sales and home prices not expected to rebound to pre-COVID levels until 2022, according to CMHC’s latest Housing Market Outlook.

“Short-term uncertainty will lead to severe declines in sales activity and in new construction, “said CMHC’s deputy chief economist Aled ab Iorwerth in a release accompanying the agency’s report, which focused on the country’s six large urban centres. “As the virus is overcome, cities will bounce back, but there is significant uncertainty with respect to the path and timing of the recovery.”

The market will also continue to be impacted by health measures, such as social distancing, “making purchasers reluctant to look for a new home (and) thereby putting downward pressure on the volume of sales.

Canada’s Housing Recovery to be Uneven

CMHC also noted that the speed and timing of the housing recovery is uncertain and will vary significantly by region. For example, Toronto, Montreal and Ottawa are expected to return to normal conditions sooner and see less severe home price fluctuations compared to the Vancouver, Calgary and Edmonton markets.

Additionally, CMHC says exposure to the volatile energy industry will present “significant risks for Calgary and Edmonton.”

Here’s a breakdown of what CMHC is forecasting for housing market performance in those cities (from Q2 2020 to Q2 2022):

Calgary

• Avg. price in Q1 2020: $438,194
• Q1 2021 forecast: -4% (best case) / -21% (worst case)
• Q4 2021 forecast: -8% (best case) / -23% (worst case)

Edmonton

• Avg. price in Q1 2020: $359,072
• Q1 2021 forecast: -4% (best case) / -22% (worst case)
• Q4 2021 forecast: -9% (best case) / -24% (worst case)

Montreal

• Avg. price in Q1 2020: $444,748
• Q1 2021 forecast: -5% (best case) / -13% (worst case)
• Q4 2021 forecast: +2% (best case) / -9% (worst case)

Ottawa

• Avg. price in Q1 2020: $498,000
• Q1 2021 forecast: -7% (best case) / -17% (worst case)
• Q4 2021 forecast: +2% (best case) / -14% (worst case)

Toronto

• Avg. price in Q1 2020: $892,238
• Q1 2021 forecast: -7% (best case) / -17% (worst case)
• Q4 2021 forecast: +2% (best case) / -11% (worst case)

Vancouver

• Avg. price in Q1 2020: $962,184
• Q1 2021 forecast: -7% (best case) / -13% (worst case)
• Q4 2021 forecast: -7% (best case) / -15% (worst case)

Outlook Still Highly Uncertain

Despite its forecasts, CMHC acknowledges that the precise timing and speed of the recovery in major markets is “highly uncertain and will vary considerably.”

“Significant uncertainty remains for both the economy and the housing market,” the report notes. “Rapid elimination of the virus and a resurgence in global trade will clearly be of benefit while further waves of the virus will put negative pressure on the economy.”

CMHC’s previous house price forecasts delivered last month by the agency’s CEO Evan Siddall—which were equally bearish—were criticized for being “oddly specific” due to the large degree of outlook uncertainty, BMO’s Douglas Porter said.

Responding to the latest outlook broken down by city, Steve Saretsky, a realtor at Oakwyn Realty and regular industry commentator tweeted: “CMHC is now picking winners and losers three months into a crisis. Seems a bit premature.”