Canada’s real estate market was already booming before the pandemic, but the demand for additional living space skyrocketed with government mandates to stay at home, driving up prices across the country. 

A new report from the Canada Mortgage and Housing Corporation suggests the trend will continue this year, predicting that the average home price will rise by as much as 14 percent in 2021. 

The ballooning real estate market could slow down by 2023, the national housing agency said in its report, but only if the Canadian population achieves widespread immunity to the coronavirus within the near future. 

“Between the low interest rates driven in part by government subsidies, and the demand for housing during a prolonged quarantine, I don’t think we’re going to see a real estate downturn any time soon,” said Tom Jakobek, a Toronto construction executive. 

In other words, home prices and the rate of sales are likely to continue climbing for at least another two years, according to the report, driving the 2021 average home price to C$649,400. The average price in 2020 was C$567,700.

Some communities have seen price increases of as much as 30 percent.

But Tom Jakobek said that with swift vaccine distribution and an economy that rebounds faster than expected, the real estate market could return to sustainable price increases sooner than expected. 

“The construction industry has actually already rebounded from the worst of the pandemic, and it was never as hard-hit as many other industries, like retail and restaurants,” Jakobek said. “If the construction industry can move forward with building new residential developments, it will provide thousands of new jobs and help drive down the huge price hikes we’re seeing right now.”

Several other pandemic trends are also likely to dissipate, according to the CMHC report. Existing home sales will likely level out in 2022 and 2023 with an increase of mortgage rates and high prices, and the trend of Canadian residents buying homes in the country will also likely flatline when it’s safe to return to high-population areas.

“The pandemic-induced surge in demand for lower density homes in suburban and smaller communities will have run its course, adding to the downtrend in existing home sales to more sustainable levels,” said Bog Dugan, CMHC’s chief economist. 

Dugan said the report and its findings should also be taken with a healthy dose of caution. 

It’s still far too early in the vaccine rollout to make any predictions about the future with absolute certainty, he said.

Any problems or delays with the vaccine rollout will change all the report’s predictions, and it’s unclear if the country’s largest metropolitan areas, like Toronto, Vancouver and Montreal, will recover economically as fast as hoped. 

Even if they do, there are other unanswerable questions, Dugan said, like what will happen to office spaces if employers don’t require many of their workers to return to the workplace.

Many major research organizations, like McKinsey, are predicting that remote work and virtual meetings likely represent a sea change in the relationship between employees and their employers. 

Although many workers will be asked to return when it’s safe to do so, many companies will embrace a new normal that continues to give employees the flexibility to work from home.

“If that happens, then the popularity of rural homes or homes in smaller communities will continue,” Jakobek said. “The reality is that there’s a lot to be hopeful about. Canada and its government have handled the pandemic pretty well. But it’s just too early to say with certainty if we can expect the housing market to moderate any time soon.”

There’s no place in Canada where the housing spike is more evident than in the Greater Toronto Area. CMHC’s highest estimates show prices rising to as much as C$1 million this year and $1.2 million by the end of 2023.