"House prices could fall by as much as 9% to 18% from their Q1 2020 levels before beginning to recover in 2021. Our forecast reflects different potential outcomes for price growth that could see home prices return to their pre-COVID-19 levels by the end of the 2022."

Although they might be forgiven for wading into what were uncharted waters at the time, the CMHC would surely like to take back this pronouncement from May, 2020.

In reality, after a sharp drop in March and April, sales surged back so that by December 2020 there were 50% more homes sold than the year before, along with 33% fewer new listings. Fewer listings paired with more sales equals higher prices.

Where will the market go in 2021? 

According to the British Columbia Real Estate Association: 
"as pent-up demand on the Island begins to fade, activity in the housing market will remain strong. Mortgage rates are expected to remain near historic lows for quite some time, and demand from those able to work from home or those accelerating retirement plans will keep demand for real estate robust on Vancouver Island."

The BCREA projects the number of sales to grow by 5% and prices to climb 2% by the end of 2021.

While acknowledging that the economic impact of COVID - so far somewhat cushioned by government programs - might keep some buyers out of the market, RE/MAX projects average home prices in Victoria to increase by 5% in 2021. Their 2021 forecast suggests “An ongoing and widespread housing supply shortage is likely to continue, presenting challenges for homebuyers and putting upward pressure on prices.”

Phil Soper of Royal LePage says “High levels of unresolved housing demand and low inventory levels will likely characterize the 2021 spring market, putting further upward pressure on housing values, particularly in the detached and larger townhome segments, as families with access to extremely low borrowing costs trade traditionally desirable urban locations for more personal space.”

I’m an optimist by nature, but I try to temper this with a dash of rational pessimism. Still I don’t see any reason to doubt the bullish projections of the big brokerages and the BCREA. Mortgage rates are at historic lows and set to stay there for at least the next couple of years. Demand is high and supply remains very low. I have no doubt that 2021 will see higher sales and higher prices, though I don’t think we’ll see the dramatic numbers of 2020.