Canada's cities will come back to life once the pandemic is over and so will demand for homes in them, according to a new paper by economists at Canadian Imperial Bank of Commerce (TSX:CM).
COVID-19 has caused buyers to shun high-rise units in city centers in favor of single-family homes with more space in the suburbs or outlying regions. That’s resulted in a divergence in prices for detached houses versus condos -- but economists Benjamin Tal and Royce Mendes don’t think it will last.
“Should COVID fade into the background, as is expected, the vibrancy of cities will return and so will the demand for housing within them,” Tal and Mendes wrote in the report published Thursday.
Workers who think they’ll be allowed to work remotely forever may be making a bad bet, they say. "The question for many employers is not if they will end work-from-home policies,” Tal and Mendes wrote, “rather it’s simply a question of when they will require employees to return to the office."
Even if people can work at home full-time, they risk missing out on other job opportunities available in cities, the CIBC economists said.
Tal and Mendes say there are other reasons the exodus of workers from cities is not a long-term trend. The price gap between homes in Toronto and its suburbs has narrowed, for example -- "enough to trigger second thoughts about moving," they wrote.
In Guelph, a city more than an hour’s drive from Toronto, the benchmark price for single-family homes soared 21% in December compared to a year earlier, according to data from the city’s real estate board. In Abbotsford, about 75 kilometres southeast of Vancouver, detached homes jumped 14%.
