Residential real estate: a reckoning or just a softening?

May 29, 2020 | Mark Porretta


About a month ago, I wrote a blog around the effects that Covid-19 could have on the Canadian Residential Housing Market. A dramatic decline in real estate activity has been no surprise due to extenuating factors like: unemployment, loss of revenue and an immigration slowdown. But in the address made by Eric Siddall (CEO of the Canadian Mortgage & Housing Corporation), he believes that the worst is possibly yet to come. Over the last twenty years, the residential housing market in Canada has seen an exponential rise in: activity, supply and prices. While the race to get into the housing market has led to increased housing prices, it has also left a distressed consumer. Before Covid-19, the average Canadian household debt was $176 for every $100. A lot of this is caused by the urgency to get into the housing market. Evan Siddall is fearful that the lingering effects of this pandemic may further cause strain on households if normalcy takes longer than expected. He mentioned in his press conference that household debt could rise from $176 to $230 in Q3 and that arrears could reach 20%. All of this could result in a decline of 9-18% in housing prices. While this is not a forgone conclusion as this pandemic will ultimately be the determining factor, only time will tell what the fall out will be. 


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