What does the looming end of remote work mean for Canada’s real estate market?

CIBC's Benjamin Tal says our current work-from-home arrangements are unsustainable

What does the looming end of remote work mean for Canada’s real estate market?

The Canadian housing market will likely wrestle with multiple risks once remote work begins dialling down post-pandemic, according to CIBC’s Benjamin Tal.

In an interview with Bloomberg, Tal said that the work-from-home trend, while a boon for Canadian employees, is ultimately unsustainable.

“It will probably continue over the next few months … but let’s picture our lives a year from now, 10 years from now,” Tal said. “A huge amount of labour will go back to the office. A lot of that would be in big cities and all of a sudden you find yourself that you have to commute maybe two or three times a week,” potentially adding hundreds of dollars to a household’s expenses.

Among the major risks introduced by the dislocation of millions of employees from their former urban-core homes is price acceleration in suburban markets.

“The question is: To what extent are prices in those remote places rising way too fast?” Tal asked, adding that it’s difficult to predict just how many employers will continue their remote work set-ups once COVID-19 infection rates begin trending downward.

“Another factor is that, yes, your current job allows you to work full-time from home,” Tal said. “What about your next job?”

And while accelerated consumer spending is expected to stimulate a sharp economic recovery in 2021, a separate Bloomberg-Nanos study found that only 11% of Canadians are intending to make major purchases – including residential real estate transactions – this year.

To compare, 39% of the respondents to a recent Nanos-Bloomberg poll said they are looking to prioritize debt repayments this year, while 37% will be storing extra funds in their savings accounts. Observers have warned that these trends might significantly impair the flow of money through the economy at a time when such market dynamism is desperately needed.

“A vigorous post-lockdown rebound in Canada is losing momentum through the first quarter of 2021,” said Andrew Husby, Bloomberg economist. “We anticipate a weak and uneven patch through the winter transitioning to a stronger-than-consensus pickup starting in the second quarter.”