Will the bubble burst in Ottawa?
CMHC has predicted up to an 18% decline in Canadian Real Estate this year. Why is this their prediction when so many industry experts seem opposed to that conclusion?
Over the course of March, April & May 2020 CMHC’s data showed that approximately 15% mortgages were deferred, so their question is what happens in September & October when many of these deferrals end? Will we see a sharp rise in Foreclosures when the deferrals end, right around the same time CERB payments are set to end?
CMHC has referred to this as the ‘deferral cliff’ that could see 1 in 8 Canadian households unable to pay their mortgages.
These are the concerns that CMHC’s Evan Siddall presented to Parliament in the House of Commons
On the other side of the debate Benjamin Tal, Deputy Chief Economist for CIBC World Markets told CFAA that they believe housing activity could accelerate as the economy continues to reopen.
In his talk he pointed out that 95% of deferrals are skilled laborers who continued to have employment and that they only expect a 5-7% default rate from the mortgage deferrals.
On the local front James Bagnall, an Ottawa Citizen columnist who follows both the housing and employment markets in Ottawa recently shared that Ottawa’s unemployment rate is only 9.5% when compared to Canada’s at 13%
Capital region's jobless rate climbed to 9.5% in June vs 8.4% in May – a net drop of 9,600 jobs while the labour force shrank by 1,900. On the same basis (3-mo. moving ave) Canada's jobless rate hit 13% in June vs 11.5% in May. Since Feb. capital region has lost 80,000 jobs.— James Bagnall (@JamesBagnall1) July 10, 2020
Of the 80,000 lost jobs in Ottawa’s market 60% are attributed to Hotel & Hospitality and Retail while the cities 2 larges employment areas, government and high-tech have remained stable.
What do you think? Will Ottawa’s housing market continue unabated or soften during the later half of 2020 into 2021?