Concerns that government aid is propping up market and worst is yet to come
Toronto’s real estate market appears to be roaring back to life, but some housing industry observers believe prices are being propped up by a combination of government income support programs and high-income earners who have yet to feel the economic pinch of the pandemic.
“The housing market is to some extent floating on COVID-19 income support programs and people who are making above $16 an hour who haven’t yet lost their jobs or taken huge salary cuts,” said David Macdonald, a senior economist at the Canadian Centre for Policy Alternatives. For example, year-over-year listings in Toronto in May 2020 dipped by 53 per cent. In June, new listings were up 2.1 per cent compared to a year ago, but active listings at the end of the month were still down 28.8 per cent compared to June 2019, according to TRREB data.
BMO’s Kavcic characterizes the pandemic housing market as one that was merely “shut down for two to three months,” but has since found a way to open back up. Alexander, who has been critical of the CMHC in the past, said the federal agency’s predictions are usually not based on real-time data.
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