Robert Hogue Speaks

by | Jun 14, 2020

Great minds have been at work interpreting the economic impact of COVID-19 on our financial health.  I heard one such person (Robert Hogue, RBC Senior Economist) this past week.  His comments confirm the concerns I raised in my last article BOLD DECISION TIME.

Robert Hogue has inspired me to continue to inform my prospective clients and potentially motivate them to get moving now – literally.  Time is of the essence if they were already thinking of moving in the next 12 months.  My update today represents what I captured from Robert Hogue’s presentation.

RBC Economist













COVID 19 is unprecedented as a shock to the economy – even traditionally recession proof sectors like education have been hit.  The nature, the suddenness, the shock is simply unprecedented.  April may have been the low point, but we could get a bumpy one step forward, and two back recovery.

During the presentation he said, that recovery by the end of year will be material, but this is a long road and we will not be fully recovered until the end of 2021 or early 2022.

Robert Hogue stated that the indicators, the “green shoots” are there, yet why will they be sustainable?  He said it is because:

  1. The government had lightening fast responsiveness, not perfect, but a massive and extraordinary response.  This has ensured there will be a recovery.  A bridge for as many households and business as possible.
  2. The Bank of Canada also responded in unprecedented ways cutting interest rates, and entering Quantitative Easing – a place the Bank of Canada has not gone before.  This approach intends to ensure that the credit process continues with some normalcy.  The interest rate spreads were wide initially, and now narrowed to a more normal set of borrowing conditions for governments.  The Bank of Canada action has been very positive. Hogue doesn’t think they will change interest rates now for the foreseeable future.

However, unemployment rate will stay high and not until late 2021 and into 2022, it will be getting back to normal.  So the housing market will reflect this situation.

In April we experienced a massive decline in sale activity – across Canada due to Emergency Orders and to certain extent unemployment.  But, COVID has not created any imbalance in the market because demand dropped, and so did supply, so the conditions stayed in balance as it was before COVID.

There was some speculation that (pre-COVID early March) was looking like early 2016 and starting to over heat, and would not be sustainable.   That year(April 2017) the Government responded  and forced a big correction.  We will see another correction yet this time it will be due to the economic impact of COVID-19.

On the Demand Side:  Going forward, he said we are concerned for first time home buyers may be having to step back and are delayed.

On the Supply Side:  Sellers will start showing up because they can’t wait and must sell now (financial distress).  These will be the Sellers that have fewer options such as investors who ran Air  B&B and now need to off load some of their investment properties.

This imbalance between supply and demand  will be building in later months starting with the “deferral cliff” early Fall and into December 2020.  The Composite Price Index Benchmark might Fall 5 – 10% peek to trough, in the last half of this year to early 2021.  Locational differences will appear.  Working at home now might pull people to stay or live in secondary markets (smaller cities and towns), and therefore those markets could be more a Sellers market as people move further out of the bigger cities.

Real Estate prices projected to take a hit later in 2020In addition to the employment impact on demand, there is a change looming for In-Migration, which has been a major source of demand in the last few years.  Now it is stopped almost completely and system is bogged down.  So inflow will be lower.  As well, we could see a short term reversal of all the Non permanent in-migration of residents (students, asylum seekers, ).  Those students will return home, and they may not return in September.

So too, will the flow of foreign temporary workers slow down given long term employment losses Canada has incurred.  Which sectors will welcome foreign workers, while unemployment for Canadians is very high, is questionable.

This will change in in-migration of residents and temporary residents will show up first in the rental market.  The rental pool that is privately owned condos for example, could be hit because the rents will go down and then maybe those properties are not so lucrative as an investment.  If that is the case, maybe those landlords will want to sell.

In summary, the prediction is that we will see a shift down in the housing market, a recession effect, and the prices of those markets.  And we won’t like recover from that change until late 2021 but more likely 2022.

This expected change in the value of your asset, may not change your mindset about timing of a move.  Yet it is my hope that by empowering you with information you have no regrets.  We don’t always get to see what’s ahead, and some people simply don’t want to see ahead.  Yet, at least this gives you a choice.  Call me today if you want to talk through your choices before making a decision to go now, or wait.  It is the time for quality professional advice.

Robert  Hogue,  is a member of the Macroeconomic and Regional analysis Group with RBC Economics.  He is responsible for providing analysis and forecast for the Canadian housing market and for the provincial economies.  His publications include Housing Trends and Affordability, Provincial Outlook, and provincial budget commentaries.

Images courtesy of RBC as published in the RBC March 2020 Housing Affordability report.  RBC March 2020 Housing Affordability.

Heather MacDonald

Heather MacDonald

Heather comes to the business of real estate & relocation, 12 years now, with a background in finance, marketing, coaching sports, and a specialty in innovation and service design.
So it’s no surprise she designed her real estate services in a unique, and maybe unprecedented way.
The Migrate Home Program complements her holistic view of quality real estate services.
Originally from BC, she has packed up and moved around enough to really appreciate change, loss, and new beginnings.