Labour shortage amid Depression-level unemployment

Tom Blackwell
The Vancouver Sun

When Johnny Tzouvelakos and his partner at LaSalle Drive-in decided to provide free meals to hospitals across Montreal during the pandemic, he was heartened to see the response from his staff.

They showed up to help prepare the food every morning for two months on a purely voluntary basis.

Not among them, however, were the four employees who quit shortly after the federal government announced its crisis support program in late March.

The Canada Emergency Response Benefit (CERB) was designed for workers who had lost their jobs or saw dramatically reduced hours because of stay-at-home orders to contain COVID-19.

But Tzouvelakos never had to lay off anyone; the four LaSalle employees left to rely on the federal payments instead, citing the dangers of remaining on the job in a city that would become the virus’s Canadian epicentre.

“People had the notion that they were going to be getting $2,000 for staying home,” he said. “My partner was saying, ‘People are leaving, what are we going to do?’ At first I said, ‘We should close.’ “

They stayed open, but Tzouvelakos’s experience underscores the unusual labour dynamics created by the COVID-19 lockdowns, CERB, and the slow re-igniting of the economy taking place now.

Amid Depression-level unemployment, some employers in low-wage industries are actually struggling to fill jobs, business groups say.

The Canadian Federation of Independent Business (CFIB) says a third of its members report having trouble staffing up, as potential employees fear returning to work amid the ongoing pandemic, while still able to rely on federal emergency benefits.

“Businesses are starting to re-open and as they do, the shortage of labour is a growing concern,” said Dan Kelly, the CFIB president. “I fully expect that we are going to have record unemployment and a shortage of labour at the same time.”

The Canadian Chamber of Commerce has heard similar stories from its members, chiefly in industries like retail, hospitality and agriculture where wages are low, said Leah Nord, the chamber’s senior director of workforce strategies.

She said the availability of benefits is only one factor keeping people at home and “we can’t dismiss concerns around health and safety, concerns around child care and elder care.”

CERB — meant for people who made at least $5,000 in the previous 12 months and were put out of work by the pandemic — pays $500 per week, the equivalent of $12.50 an hour over a 40-hour work week.

That’s slightly more than the minimum wage in four provinces.

“I get it,” said Kelly. “If you’re at or near minimum wage and your bills are now being paid by the CERB benefit, you’re not going to make much more by going back to work.”

And, he said, those people have been told for weeks to shelter inside or risk contracting a dangerous new disease.

Still, both business groups suggested the federal government will have to eventually scale back or end CERB to increase the incentive for people to return to work.

Hassan Yussuff, president of the Canadian Labour Congress, does not believe reluctance to rejoin the workforce is a widespread problem. But “adjustments” to the benefits programs to ensure people on CERB don’t suffer a drop in income when they go back to their jobs would help — as will solid efforts by employers to make workplaces safe, he said.

“The vast majority of workers know that whatever benefit they’re getting right now from the government, these benefits are not going to be in perpetuity,” said Yussuff. “If you can have your job back, there will be far better security at the end of the day for yourself and your family.”

Marielle Hossack, a spokeswoman for Carla Qualtrough, the employment, workforce development and disability inclusion minister, said workers who have qualms about the safety of their working conditions should discuss that with their employer.

“Canadians applying for the CERB cannot voluntarily quit their job,” said Hossak. “If and when it becomes possible for Canadians to safely go back to work, they should do so.”

The CERB program has been widely praised as an efficient, if hugely expensive, way to offset the lockdown’s devastating economic effects, which put millions of Canadians out of work. Claimants can receive the payments for up to 16 weeks, until October. But there has been controversy over some aspects of its administration, including directives to officials that they should approve any claimant who quits voluntarily and adjudicate “contentious issues” later – despite rules to the contrary.

Tzouvelakos had 40 employees when the lockdown in Quebec began in mid-March and planned to keep them all, with a steady stream of take-out and delivery customers keeping his business in the Lasalle borough of Montreal afloat.

The four who quit cited fears about working amid the pandemic, and the need to look after children whose schools were closed. He told the four recently they would be replaced if they did not return to work now, and two are back.

But Tzouvelakos isn’t dwelling on their situation. He, partner George Tsimiklis and high-school friend Glenn Kelly, split the more than $20,000 cost of providing 65 meals a day to employees of various hospitals around Montreal.

The response of those beleaguered health-care workers to the daily deliveries is something he says he won’t soon forget.

“Food makes people happy,” said Tzouvelakos. “When they see food, it changes their mood. If you saw these people coming out of the hospitals, they were ecstatic.”

© 2020 National Post

Realtors continue to help clients feel safe

Ephraim Vecina
Mortgage Broker News

The Ontario Real Estate Association (OREA) has published its latest guidelines on home purchase transactions in the era of COVID-19.

“The health and safety of our realtors and their clients is OREA’s top priority during this pandemic,” said Sean Morrison, president of OREA. “As Ontario’s economy reopens, many Ontarians are looking to get back into the real estate market. Realtors are here to help make home buyers and sellers feel comfortable and safe while they work to find their dream home. OREA’s guidelines have been informed by up-to-date information from public health, best practices from the industry and experiences in jurisdictions across North America.”

OREA was among the earliest organizations to have petitioned a shift to mostly online transactions once the coronavirus pandemic took hold in late March.

“Now that the Ontario government has announced stage one of its plan to re-open the economy and with many consumers looking to get back into the market, it is important that realtors continue to help their clients feel safe and secure and keep the virus at bay,” OREA said in a statement this week.

The association is mandating its agents to “continue [using] virtual tools, conduct virtual open houses and virtual showings to the greatest extent possible,” despite the restarting of the economy. This includes maximizing the use of phone, email, and video communications with clients, as well as processing all documents via electronic channels.

Agents should also “thoroughly disinfect surfaces, leave doors open and keep lights on at all times during in-person showings,” OREA said. “When interacting with clients, maintain physical distancing and use personal protective equipment when distancing is not possible.”

Copyright © 2020 Key Media

Canadian real estate prices will remain stable

Ephraim Vecina
Canadian Real Estate Wealth

Housing industry players are opposing Canada Mortgage and Housing Corporation’s dire forecast of an 18% decline in home prices over the next 12 months, claiming that demand remains elevated and inventories continue to hover near record lows.

“Assuming that demand continues its current course, Canadian real estate prices will likely remain relatively stable or experience a single-digit price correction at worst,” RE/MAX said, adding that its agents are still reporting multiple offers on a regular basis.

“CMHC doesn’t seem to understand the sheer number of sellers that would have to accept this kind of price reduction, in order for average housing prices to plummet to this degree in such a short time span,” said Christopher Alexander, executive vice president and regional director with RE/MAX of Ontario Atlantic Canada. “Sellers simply won’t accept that kind of discount on their listings. A statement of this nature is panic-inducing and irresponsible.”

Government agencies should instead focus on how the housing markets – and the Canadian financial system as a whole – could weather the unprecedented impact of the coronavirus, according to the C.D. Howe Institute.

“Ottawa and the provinces need to recommit to fiscal and monetary anchors in light of the unprecedented stimulus response provided by all levels of government and the Bank of Canada throughout the COVID-19 crisis,” C.D. Howe said. “Canada is emerging from the first wave of the pandemic with very high public and private debt loads and is increasingly dependent on domestic and foreign investors to finance them. With the loss of Canada’s fiscal anchor, maintaining investor confidence so that public and private debt can be carried at a reasonable cost is essential.”

Copyright © 2020 Key Media Pty Ltd

Nanos Canadian Confidence Index

Ephraim Vecina
Canadian Real Estate Wealth

While Canadian consumer confidence is steadily recovering, the same cannot be said about the public’s views towards the housing market, according to the latest Bloomberg Nanos Canadian Confidence Index.

Polling found that 48.54% of respondents are anticipating a decline in home prices within the next few months – a level approximately three times above the average for this metric, Nanos Research said.

“Even as sentiment has improved around the economic outlook and personal finances, expectations around real estate are weakening,” Nanos said.

The overall confidence index went up for the fourth consecutive week, reaching 39.3.

“While the index remains near its worst-ever readings recorded last month, the rise in confidence in recent weeks suggests negative sentiment may be finding a floor amid talk of reopening the economy,” Nanos said. “Regionally, the gains in sentiment have been mostly in Western Canada, aided by a recent rebound in oil prices and relatively fewer coronavirus cases.”

Overall confidence remained at near-record lows in Ontario and Quebec, however.

Sentiments toward personal finances over the past year have soured to 36.7%, from 42.3% last month.

There was less pessimism towards the economy, although the overall level was still quite high. Around 73% of respondents said that the economy will worsen within half a year, down from 80% last month.

Copyright © 2020 Key Media Pty Ltd

Bidding war erupts for heritage home during the pandemic

John Mackie
The Province

Real estate listings, and sales, have plunged during the COVID-19 crisis. But some properties are still selling.

Realtor David Richardson recently listed a handsome heritage home at 2120 East Pender for $1.588 million. Open houses have been nixed during the crisis, so his office set up private viewings by appointment on April 25 and 26.

So many people wanted to see it they had to extend the viewings for two days. They received 14 offers, and the buzz in the real estate industry is that the house sold for $1.928 million, $340,000 above the asking price.

Richardson wouldn’t confirm the price because the deal hasn’t closed yet. But he said there was a lot of action.

“We sent out 8,000 flyers (for the listing, noting it was) by appointment only,” said Richardson. “We lined them up every 20 minutes, and it took four days to show 75 people.”

The house was built in 1906, when its neighbourhood (Grandview) was vying to be one of Vancouver’s elite areas.

It’s big (four bedrooms, 2,500 square feet) and is brimming with character, with a turret on the outside, big open spaces on the main floor and lots of old growth wood and stained glass. It’s also on a large lot, 50 by 66 feet.

In short it’s the kind of home you might find in parts of Kitsilano or the West End. But you’d have to pay much more for a house like this on the west side, so Richardson said many of the people looking were west siders looking east.

“There’s a 20 per cent price difference (between the west and east sides),” said Richardson, who usually sells west side properties. “On a $2 million house, that’s $400,000.”

Richardson thinks one of the reasons the house attracted so much attention was a lack of listings during the pandemic.

“Normally a guy like me carries 12 to 15 listings at this time of year. I’m carrying one or two, and they’re being snapped up right away.

Realtor Les Twarog said things have been slow.

“The real estate board normally has 120 sales a day, and we’re doing about 40 or 50 sales a day,” he said.

But things are starting to pick up: Twarog has listed eight properties in the last couple of weeks.

“I listed a property on Kingsway and Boundary, $350,000, and I got eight calls in two days on it,” said Twarog. “I have another property I listed in Victoria yesterday at five o’clock, and I got 15 calls. The price is $500,000.”

Twarog said the two key factors in selling seem to be “a lack of inventory and the price point.”

“Things are happening, but most sales are under $1.2 million,” he said. “Five hundred, six hundred, seven hundred thousand, those are the hot price points.”

On Vancouver’s west side, there were 421 detached houses for sale in April, but only 37 sales, which is down from 699 listings and 64 sales in April, 2019. In east Vancouver, there were 349 detached house listings and 49 sales, down from 664 listings and 66 sales in April, 2019.

There were 647 condos and townhomes listed on the west side in April, and 78 sales, down from 977 listings and 137 sales a year ago. Fifty-seven of the 78 sales were for $1 million or less.

On the east side, there were 386 condos and townhomes listed and 67 sales, down from 583 listings and 141 sales last April. Thirty-three of the 67 sales were for condos $600,000 and under.

Selling a home is a bit different during the COVID crisis. Realtors have been using online tools like Zoom, Google Meet and Instagram to try and show listings.

To see 2120 East Pender, you had to book an appointment in advance, and not be late.

“Each appointment was individually booked at a time,” said Sarah Starling, who works with Richardson.

“So we had 11, 11:20, 11:40, 20 minute intervals. Everyone was required to wear a mask and gloves, and we provided booties. So everybody had to go with mask, gloves, booties, one group at a time.”

© 2020 Postmedia Network Inc

CMHC doomsday housing forcast

Frank O’Brien
Western Investor

Canada Mortgage and Housing Corp. (CMHC) released a doomsday-style housing forecast May 27 that envisioned a nightmare collapse of the housing market with national sales dropping up to 29 per cent, starts plunging by from 50 per cent to 70 per cent and average house prices dropping as much as 18 per cent with no real recovery until 2022.

“Canada will see a historic recession in 2020 with significant falls in indicators of the housing market,” stated the Housing Market Outlook special edition spring 2020.

Bob Dugan, CEO of CMHC was quick to add the disclaimer that , “this housing outlook is subject to unprecedented uncertainty due to the pandemic” during a conference call with media.

The report states that Western Canada will be hit particularly hard, due to the Prairie provinces’ reliance on the resource industry and British Columbia’s exposure to the tourism and hospitality sector, which have been hammered by the global COVID-19 pandemic.

But CMHC’s uncertainty about its forecast is well placed, according to residential industry experts, who say there are early, positive signals that the current downturn could be brief, if brutal.

“We are already seeing inquires from home buyers up 5 per cent from pre-COVID levels,” said Elton Ash, Western Canada executive vice-president for Re/Max. Ash noted that the high level of housing sales at the start of this year is an indication of coiled demand that will lead to a quicker recovery than most expect. Ash is particularly bullish on Metro Vancouver, noting benchmark home prices increased in April and May, compared to a year earlier, even as sales crashed in the face of the pandemic. 

“To see the price drop that CMHC is suggesting is unrealistic,” Ash said. He sees downward price adjustments in B.C. of perhaps 5 per cent to 10 per cent, depending on the region.

“Yes, there has been some economic pain, but not to the extent that CMHC is suggesting,” he said.

Ash added that realtors and consumers have widely embraced the latest technology for virtual home tours, listings and communication, which has allowed many home transactions to proceed.

Brendon Ogmundson, chief economist of the BC Real Estate Association, is also confident that the “resiliency” of home buyers will lead to recovery later this year, following the plunge in housing sales with the arrival of COVID-19.

“We should be happy sales only fell by 50 per cent when you consider this is a global pandemic,” he said. Ogmundson said home prices in B.C. will remain fairly stable because the number of homes for sale has declined nearly 25 per cent because of social distancing. In April, he added, the benchmark provincial home price was 7.8 per cent higher than in April of 2019.

BCREA expects a sales recovery to begin in the second quarter, fed by “super low mortgage rates and pent-up demand,” Ogmundson said,

Ogmundson also noted that the majority of lost jobs are in the lower-end of income levels. “This will have more of an impact on the rental housing market rather than those buying homes,” he suggested.

Copyright © Western Investor

Should homeowners sell when there is a separation during the pandemic?

Nathalie Boutet
REM

COVID-19 has impacted all sectors of the economy, including real estate. The uncertainty is particularly challenging for homeowners who are at a crossroad in their relationship or in the process of separating.

The heightened tension created by the pandemic can fuel anger and conflict, leaving children especially vulnerable. If it becomes too tense in the residence and someone needs to leave, the process has become a little more challenging than before, but there are still viable options.

Should homeowners sell when there is a separation during the pandemic?

At the time of writing, real estate remains a sellers’ market with little supply. It may be more difficult for families in need of alternative living arrangements to allow for a physical separation.

It is also challenging for couples to get an accurate value of their property because the markets are in such flux. Compounding this is the difficulty for a spouse to qualify for a mortgage if their income has been affected by a layoff or a termination as a result of the coronavirus. With such an overwhelming scenario and an uncertain economy, now may not be the best time to make important decisions such as selling the family home.

It may make more sense to access short-term rental accommodation during the pandemic while the legalities of the separation are sorted. The protocols for finding a rental property have changed to accommodate physical distancing, with virtual showings, and only people with serious offers may be able to attend in person to see the place before finalizing the offer to lease.

Consider the best interest of children

Couples struggle to know if it is in their children’s best interest to stay together under the same roof, even if there is a lot of acrimony, or if it’s better to live physically apart.

While it’s likely harmful to the children’s well-being if the family stays together under tense or acrimonious circumstances, there may also be harm to the children if a parent leaves without a formal parenting plan in place. Struggling parents should look for counsellors, lawyers, mediators and financial planners who now offer their services by phone or videoconference, to get quick, professional guidance toward the solutions that work best for the family’s circumstances.

Who pays what?

Money is often the biggest source of conflict, and this could get worse if someone’s livelihood was affected by the pandemic. They struggle to find a fair way to pay the household expenses and the children’s expenses after the decision to separate has been made – even if they continue to live under the same roof.

While there is no one-size-fits-all solution, there are many ways to deal with expenses. It depends on a number of factors, including who has financial resources. It may make sense to continue the same arrangements that were in place before the decision to separate until professionals can guide the family towards different arrangements.

In some cases, couples put an agreed amount of money in a joint account and use that to pay family expenses until there is a more long-term arrangement in place. Sometimes, separating spouses may even be able to structure their payments in a way that maximizes tax savings. It should be noted that if a couple decides to live in two separate residences during separation, these expenses are shared equally.

Family laws are fairly complex when it comes to finances and money, and it is recommended to speak to a family law lawyer or mediator about these types of questions.

Legal ways to separate

Among the various legal approaches, there are two very good options for separating families, and they are collaborative negotiations and mediation. These two systems are encouraged as the first choice under Ontario’s revised Family Law Act, to help families reach agreements out of court with the aim of preserving some kind of relationship after the legal process is complete. The cost also tends to be less than going to court.

Professionals that work in these two systems have received special negotiation and communication training, using specific techniques that are very beneficial to helping their clients and families.

Especially with courts closed during the pandemic, and only urgent matters being heard, collaborative negotiation and mediation offer fantastic avenues for couples to quickly access help and find solutions that are best for their family’s needs.

© 1989-2020 REM Real Estate Magazine

A 10 percent minimum down payment would have a chilling effect on business

Ephraim Vecina
Mortgage Broker News

Canadian Mortgage and Housing Corporation CEO Evan Siddall’s recent address to the Standing Committee on Finance contained a plethora of negative projections, from housing prices falling by 18 percent to one-fifth of all Canadian mortgages being in arrears by September. But it was his comments around the advantages of making 10 percent down payments and CMHC’s attempts to limit demand that have the industry wondering if an increase in the minimum down payment requirement may be in the cards.

As Siddall made his case for the approaching “deferral cliff”, a scenario where unemployed homeowners who have deferred their mortgage payments are asked to start making them again despite not returning to work, he shared with parliamentarians two key pieces of data that associate five percent down payments with increased risk.

The first, a chart that tracks the percentage of loans in deferral by their loan-to-value ratios, showed that 69 percent of the mortgages currently in deferral fall into the 90-95 percent LTV category. The implication seems to be that if there were fewer borrowers putting down five percent, the deferral cliff Siddall described might be less towering.

Siddall singled out first-timers again when he discussed the potential losses they could face if housing prices fall by 10 percent.

“Unless we act, a first-time homebuyer purchasing a $300,000 home with a 5 per cent down payment stands to lose over $45,000 on their $15,000 investment if prices fall by 10 per cent,” Siddall’s statement read. “In comparison, a 10 per cent down payment offers more of a cushion against possible losses.”

Because CMHC will be on the hook for any insurance claims triggered by failing mortgages, Siddall also said the Corporation is evaluating its underwriting policies.

“So if housing affordability is our aim, as surely it must be, then there must be a limit to the demand we help to create, especially when supply isn’t keeping up,” he said.

That’s the same logic that gave Canada its mortgage stress test. Many brokers are worried that a 10 percent minimum down payment would have a similarly chilling effect on business.

“I think it would be a comparison you could draw a lot of parallels to,” says Anthony Venuto of Centum Intouch Mortgage Solutions.

As with the stress test, Venuto feels that any desire for a doubling of the down payment requirement will be driven by the risk associated with lending in Canada’s most expensive markets – Toronto, Vancouver, Montreal, etc. – even though most, if not all, properties in those cities sell for over $500,000, making them ineligible for five percent down payments. It will be the smaller, softer, far more numerous markets where consumers will see their spending power evaporate.

“What about the rest of Canada?” he wonders.

Impact on brokers
Chris Kolinski operates for iSask Mortgage Brokers in Saskatoon. The Bridge City’s real estate market has been soft as warm cheese for the past five years. With homes there appreciating so slowly, buyers often opt for putting five percent down.

“I’d say about 80 percent of the purchases I do are five percent down purchases,” Kolinski says. “It actually comprises a big chunk of the business I do.”

Kolinski is in regular contact with brokers in Alberta and Manitoba. He says minimum down payment deals are a common occurrence.

“If this was to happen, I anticipate a big hit to homebuyers in the prairie provinces for sure,” he says.

John Vo of Spicer Vo Mortgage in Halifax, another market where buyers are regularly able to purchase homes will five percent down, understands the desire of insurers and lenders to protect their assets by requiring higher down payments. But it’s an odd move for institutions that require a high volume of home purchases to keep the wheels spinning and the margins as high as possible.

“They’ll have more quality mortgage holders,” Vo says, but far fewer overall.

With down payments being one of the biggest challenges facing homebuyers, Vo says brokers will be expected to work much harder for their clients if the down payment requirement doubles. It will require a delicate balance: Brokers will have to set hard savings guidelines for their clients if they hope to qualify, but buyers frustrated by their situations may decide to switch brokers if they’re constantly being told something they don’t want to hear.

“We’re going to have to become even more firm with our customers in saying, ‘This is your plan. You really need to stick to it,’” he says.

For Kolinski, an increase in the required down payment is a challenge he’s ready for.

“I’ll adjust the same way I did when they introduced the stress test back in 2016,” he says. “It was a huge panic for me when it happened. But ultimately, it comes down to us as brokers being able to adapt to the market.”

Few in the industry seem to think the change is imminent. Either way, the discussion around down payment levels has shone a harsh light on the anxiety-ridden situation facing first-time buyers.

“We’re hearing more and more that home ownership isn’t a right, it’s a privilege,” says Verico COO Mark Squire. “You feel for those first-time buyers. You’re going to see more pressure on the bank of mom and dad to help out.”

Copyright © 2020 Key Media

Quick recover expected post pademic

Ephraim Vecina
Mortgage Broker News

Despite multiple headwinds and the continuous ravages of COVID-19, Canadian market activity and purchasing power will be able to recover quickly after the outbreak eases, according to outgoing Bank of Canada Governor Stephen Poloz.

“We have to be able to manage the risks around those things, so I’m not going to dismiss [the worst scenarios],” Poloz told BNN Bloomberg. “But, me personally, I do think on balance what I’m hearing, the flow that I’m hearing, is a little too dire, a little bit overblown.”

In the greater scheme of things, the coronavirus will not be a fatal roadblock, Poloz said. While the national economy is still on track to decline at least 15% this year, “you should see a very rapid return to production” once the economy restarts in late 2020, he said. “I’m relatively optimistic, what I find, compared with what the talk is.”

These predictions dovetailed with other observers’ forecasts of speedy post-pandemic recovery across the board, pointing at the Canadian financial system’s robust fundamentals.

However, the pace of this recovery will depend on homeowners not selling their assets, according to TD Economics.

“Absolutely key to our forecasts is the assumption that listings mirror sales by dropping substantially in the near term and recovering gradually thereafter,” said TD economist Rishi Sondhi. “This puts a floor on prices and sustains relatively tight supply-demand balances across most markets, allowing for the resumption of positive price growth as provincial economies are re-opened.”

Copyright © 2020 Key Media

Metro real estate in for a wake-up call

Douglas Todd
The Vancouver Sun

More condominiums and houses are under construction in Metro Vancouver than ever before.

But who is going to buy them — let alone live in them — in an era mutated by COVID-19? Who will come forward when a global lockdown has pummelled the three key factors that fuel housing demand in Canada?

A record-breaking 44,000 “homes” are being built across Metro Vancouver. Almost 37,000 are condominiums or apartments. Planned years in advance to serve a once-fiery market, their construction has not been stopped by lockdown measures.

Judging by the trend of the last decade, developers of new Metro properties would expect about four in 10 of their dwellings to be snapped up by people who don’t actually live in them — so-called investor-owners, who leave the “homes” vacant or rent them out. (The real-estate market is similarly vulnerable in Toronto, where a record 73,000 units are under construction.)

But who are these houses and condominiums to be sold to at a time when the pandemic is causing double-digit unemployment, has pushed household debt and default into uncharted territory and thrown nerve-wracking unpredictability into population-growth forecasts based mostly on offshore in-migration?

A record 44,000 housing units are being built in Metro Vancouver, plus another 73,000 in Greater Toronto. Source: CMHC / Steve Saretsky

Metro Vancouver and Toronto are not alone, especially among desirable cities, in seeing their real-estate foundations cracked by the novel coronavirus, which has already caused the volume of sales to plummet.

Prices are set to be next. Various analysts have forecast housing values in Great Britain, Australia and the United States to drop by 10 to 20 per cent over the next year or two.

Predictions about the future of Canada’s housing prices are all over the proverbial map, to an almost comical degree (although few are laughing). Stephen Punwasi, of Better Dwelling, has compiled the wildly diverging Canadian housing forecasts of a dozen big-time analysts.

They range from TD Canada Trust and Scotiabank over-optimistically prophesying, at least for public consumption, that prices will rise six to 12 per cent over the next two years. That contrasts with credit agencies such as Moody’s and DBRS Morningstar more quietly predicting they will drop 10 to 30 per cent. The Canada Mortgage and Housing Corporation (CHMC), for its part, is looking at declines of nine to 18 per cent.

Meanwhile, the Canadian Real Estate Association has simply decided to not make its usual quarterly prediction. That leaves Punwasi musing: “CREA’s mom must have told them if they can’t say anything nice, don’t say anything at all.”

Right now, in the havoc-filled short term, it’s prudent to take the forecasts of self-interested mortgage-holding banks far less seriously than the more impartial credit and housing agencies. Their predicted price drops could hurt over-leveraged owner-investors, but end up being good news for working people who have withstood COVID-19 and might be able to buy a first home or move into something better suited to their needs.

It’s grim out there, though. Virtually no one is blind to the first COVID-19 factor set to hammer prices: That it has cost more than three million Canadians their jobs, at least temporarily. The second crisis, of growing household debt, is also clear: CMHC president Evan Siddall said this week that 20 per cent of Canadian mortgages could go into arrears.

When it comes to the third COVID-19 factor threatening housing sales, only a few industry specialists talk about how migration patterns, which are changing dramatically because of the pandemic, will hit housing demand across Canada and especially Toronto and Metro Vancouver (the latter with a population of 2.6 million).

More than four out of five people who have moved into Metro Vancouver (and Toronto) in recent years are foreign-born. Many are immigrants, but an unusually large portion — 35 per cent — are non-permanent residents, such as international students, guest workers and refugees, says B.C. housing analyst Steve Saretsky.

Not only have COVID-19 precautions virtually shut Canada’s borders to newcomers, they’ve led to many of the more than one million international students and guest workers in Canada (about 180,000 in Metro Vancouver) returning to their homelands. That’s hitting housing, especially the rental markets of Vancouver and Toronto, which have the highest immigration rates per capita in North America.

No province in Canada relies more than B.C. on in-migration to expand its population, which creates more demand for housing. Citing data from Capital Economics, Saretsky wrote in his April report: “In B.C. we are particularly vulnerable to a reduction of migration flows. Net immigration was 14 times as large as the net natural increase (ie. net births less deaths) — versus fives times for Canada as a whole.” (See chart.)

One politician paying attention to these many ways COVID-19 is affecting the region’s mammoth housing industry is Vancouver city councillor Colleen Hardwick.

The daughter of the late University of B.C. geographer Walter Hardwick (who also served on Vancouver council) has a motion asking why the city has a housing strategy focused on building far more units that it actually needs.

Hardwick’s motion — set to be debated next week, with supportive presentations by several B.C. housing scholars — says that in light of “post-pandemic realities,” City of Vancouver politicians and staff should be re-examining why it is targeting to build 72,000 new dwellings over the next decade.

The city of Vancouver, population 680,000, has been growing by one per cent a year mainly because of offshore migration, says Hardwick’s motion. At that growth rate, the city really needs only 30,000 new housing units over the next 10 years.

And given that “there’s no question COVID-19 is going to have a major impact on housing” and migration flows, Hardwick said in an interview she wonders why so many officials have been creating a “scarcity narrative” to justify increased zoning densities and intense surges in housing supply.

In order to plan housing effectively, Hardwick is urging city staff to provide better data and a more credible construction target, one that will meet the needs of ordinary people who live and work in the region, not necessarily serve luxury buyers, many of whom spend foreign-sourced capital.

Along with some other savvy municipal politicians in Metro Vancouver’s suburbs, Hardwick is aiming for a more healthy way forward in a region where many developers have for years been erecting dwellings largely to satisfy the desires of owner-investors and speculators.

© 2020 Vancouver Sun