Owning a home remains the largest single investment for most Canadians. So it’s not surprising that fear over an economy turned upside down literally hits home for so many.
The Canada Mortgage and Housing Corporation (CMHC) recently warned the pandemic and resulting lockdown of the economy could drive the country’s average home prices down by between nine per cent and 18 per cent, as job loss and uncertainty force many Canadians to the sidelines. The federal housing agency expects the housing sector will not return to pre-pandemic levels until the end of 2022.
Most of the concern centres on oil-producing regions hit hard by the crash in crude prices. Housing analysts also point out vulnerability in big cities; especially the booming Vancouver and Toronto condo markets.
That’s potential bad news for speculators or those who just bought a home in a vulnerable region and want to sell in the next three years. For most long-term homeowners who can maintain a sufficient source of income, the best and safest investment remains the roof over their head.
According to the CMHC, average Canadian house values have increased by over five per cent annually over 25-year periods going back to the Second World War. That includes the 2008 global financial meltdown when predictions for a housing market collapse never materialized.
Many homeowners have already benefited from the pre-pandemic housing boom, and for new homeowners, any decline over the next three years can easily be absorbed once the market gets back on track.