After the Canadian Mortgage Housing Corporation (CMHC) released its projection that house prices could drop up to 18 per cent over the next 12 months, real estate company RE/MAX responded with an outlook of its own.
In a statement this week, executive vice president at RE/MAX of Ontario-Atlantic Canada, Christopher Alexander, called CMHC’s outlook “panic-inducing and irresponsible” and claimed that Canadian real estate prices would remain relatively stable or see a single-digit correction at worst.
“It’s literally irrational,” Ron Butler, mortgage broker at Butler Mortgage, told Yahoo Finance Canada about the RE/MAX projections.
Butler recalled the double-digit declines in some regions across the Greater Toronto Area in 2017.
“There was no economic reflection point, no economic disaster or even a problem – how in the world do you declare single-digit change for COVID? The only word you can use is irrational.”
RE/MAX, which had previously anticipated a 3.7 per cent real estate price growth over 2020 in a report late last year, also stated that its brokers on the ground were seeing lower housing inventory in many markets, high demand, and multiple offers as “a common scenario”.
Evan Siddall was quick to defend CMHC’s position in a Twitter post. “They’re whistling past the graveyard and offering no analysis. Here’s ours. You decide.” Siddall also encouraged readers to question the motives of anyone suggesting that house prices “always go up.”
Siddall’s overt messaging on the COVID-19 impacts is consistent with his style of industry analysis and responding to criticism, though it’s different from how others who held the position before him spoke to the public.
“Evan Siddall, unlike all of his predecessors has chosen to be extremely vocal, extremely opinionated, extremely acerbic in his reactions,” said Butler.
The post triggered a response from the RE/MAX Twitter page, inviting Siddall to a debate on national television with Alexander. There were no further developments on this offer at publishing time.
CMHC also reported this week that the housing market isn’t expected to begin to recover from COVID-19 until mid-2021 and home prices won’t return to their pre-COVID-19 levels until the end of the 2022. This report came after Siddall presented figures in his report on mortgage deferrals to the House Finance Committee last week, estimating that 12 per cent of mortgage holders elected to defer payments. By September, the organization projects that this figure will climb to 20 per cent.
In light of the aggressive economic impacts that COVID-19 had on Canadian employment, anticipated immigration numbers, and consumer confidence, experts in the industry agree that the negligible price changes real estate companies are anticipating don’t make sense in this current environment.
“If you sort of try to add up all these things, how does that support some of the highest house prices in the world? It just doesn’t add up,” Butler said, “And then when you start to suggest that everything’s going to be fine in a few months, or a year, in 2021 – really?”
In observing the immediate COVID-19 hit to Canada’s economy, Butler’s main takeaway is that the future of real estate trends is “unknowable, but worrisome”. “I think that in the face of a once-in-a-century worldwide catastrophe, that it might be reasonable to just kind of hold back and watch what happens now.”