Canada Mortgage and Housing Corp. says the average home price could rise by as much as 14 per cent this year, but the pace of sales could moderate by the end of 2023 if broad immunity to COVID-19 is soon achieved.
Prices across the country could soar to as much as $649,400 by the end of the year and reach as high as $704,900 in 2023, the federal housing agency predicted Thursday as it unveiled its annual outlook.
However, the report showed CMHC's lower-end estimates place the average price at $628,400 by the end of the year and $669,500 by the end of 2023.
CMHC foresees sales and prices slowing from the heated pace triggered by the COVID-19 pandemic in the next two years, but only if the country manages to quell COVID-19 this year and economic conditions return to pre-pandemic levels.
CMHC predicts sales in 2021 will be as low as 584,000 or as high as 602,300, but will slow to as little as 539,600 or as much as 561,100 in 2023.
Last year ended with sales amounting to 551,392 and an average price of $567,699.
"Low mortgage rates, high savings rates and the resilience of income and earnings for more affluent households will continue to support sales for more expensive housing types in 2021," said Bob Dugan, CMHC's chief economist, on a call with media.
"In 2022 and 2023, existing home sales will gradually moderate as rising mortgage rates and high prices begin to restrain demand."
The pandemic trend that saw people flock to cottage country and spacious rural homes will also dissipate.
"The pandemic-induced surge in demand for lower density homes in suburban and smaller communities will have run its course, adding to the downtrend in existing home sales to more sustainable levels," Dugan said.
But many of these predictions are subject to significant risk, Dugan warned.
COVID-19 remains volatile, economic recovery in major markets is still highly uncertain and a slower-than-expected vaccine rollout would prolong the pandemic and lead to higher mortgage rates, CMHC said.
How employers address remote work could also upend the outlook, Dugan added.
"This is a big question and one that is very difficult to answer, quite frankly," said Dugan.
"Will employers want their staff back in the office after the pandemic is over or will remote working arrangements continue to some degrees?"
If remote work arrangements continue, he said price differentials between major metropolitan centres and rural counterparts could erode or even reverse.
As Canada pulls itself out of the pandemic, CMHC expects housing starts to stabilize by the end of 2023.
It predicts that rental demand will rebound as immigration recovers, but vacancy rates will likely remain elevated.
In the Greater Toronto Area, where market conditions have heated significantly during the pandemic, CMHC's highest estimates show prices rising to $1,087,600 this year and $1,205,400 by the end of 2023.
Sales in the city could amount to as much as 113,500 by the end of 2021 and 123,800 by the time 2023 concludes.
They sat at 95,577 in 2020, while average prices totalled $929,673.
Vancouver, another hot market during the health crisis, may see prices climb to as much as $1,129,000 later this year and $1,395,000 by the end of 2023, CMHC said.
The agency added that sales in the city may increase to as much as 50,000 in 2021 and 44,700 in 2023.
Sales amounted to 43,063 last year and the average price was $1,008,688.
This report by The Canadian Press was first published May 6, 2021.
Tara Deschamps, The Canadian Press