Home prices in Metro Vancouver to drop starting later this year: CMHC

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Expect a years-long downturn in Metro Vancouver’s residential real estate market due to the prolonged impacts of COVID-19.

Canada Mortgage and Housing Corporation’s (CMHC) newly released forecast states housing starts in the Vancouver region will “contract significantly in the immediate future,” with demand taking a fall due to reduced immigration, domestic migration, the loss of household income due to mass unemployment, and the increased economic uncertainty affecting consumer confidence.

Analysts say the immediate effect of COVID-19 deepened the decline in construction activity that was already in progress before the pandemic, but housing starts are expected to see some recovery by the end of 2020 to a pace that is based on the region’s fundamentals and economic growth.

Total housing starts — new construction — could range from 11,925 units to 17,710 units in 2020, 15,290 units to 23,475 units in 2021, and 16,050 units to 24,060 units in 2022. In comparison, there were 23,404 unit starts in 2018, and 28,141 in 2019.

Prior to the pandemic, sales activity on new construction was recovering from the downturn induced by government interventionist policies, but the effect of COVID-19 will delay this recovery.