Tal noted that the condo market is experiencing "healthy softness"
The sustained strength of the housing market, combined with a likely post-pandemic population boom, will inflame demand for rental units and long-term housing, according to Benjamin Tal of the Canadian Imperial Bank of Commerce.
The observed weakness in the rental market, especially in the downtown Toronto condo segment, is more along the lines of a “healthy softness,” Tal argued. This is because the speculation that drove the feverish growth in Canadian urban markets over the past few years has recently been largely absent.
“I don’t see a collapse in the housing market. Prices are high and unfortunately, they will remain high even after COVID,” Tal told Bloomberg. “That’s the reality of the situation in the Canadian housing market until we fix the supply issue that is really impacting valuation in big cities.”
A significant driver of demand will likely be Canadian citizens returning from the United States and Hong Kong. Tal noted that this segment represented a “blind spot” in most housing forecasts.
“We didn’t know the numbers because, quite frankly, Stats Canada does not capture the number of people returning to Canada,” Tal said. “They really do not distinguish between tourists and returning citizens.”
Taking 2019 and 2020 trends into account, the epicentres of future growth might include what have shaped up to be the country’s fastest growing cities, Statistics Canada suggested. In another report, the StatCan said that the growing number of Canadians moving away from urban core markets will be “an important trend to monitor.”
“The desire to live outside the largest urban centres was also reflected in the rapidly increasing housing costs in neighbouring real estate markets, a trend that has continued in spite of the pandemic,” StatsCan said, adding that “personal health, the ability to work remotely, and higher housing costs are among the most important factors contributing to the decision of many Canadians to continue (or to no longer continue) living in large urban centres hardest hit by the pandemic.”
