W-shaped recovery would be ‘very severe’ without government assistance: CMHC

OTTAWA, ON – The Canadian Mortgage and Housing Corporation says new risk assessments it conducted show a W-shaped recovery from a pandemic could trigger a nearly 50 per cent drop in housing prices and a peak unemployment rate of 25 per cent.

A W-shaped recovery is when an economy begins to rebound from a recession quickly but then rapidly falls into another period of downturn before recovering again.

The national housing agency says a W-shaped recovery from a pandemic that does not involve government assistance would challenge CMHC’s solvency and capitalization.

CMHC says the situation is the most implausible of all the ones they stress tested, but the impact would be the most severe.