Canadians love their homes for good reason.

They’ve become very rich in large measure due to increases in the value of the properties.

With COVID-19 wreaking havoc on the economy, homeowners could emerge from the pandemic still wealthy.

That is if home prices do not crash.

A recent TD Economics paper outlines forecasts about wealth, savings, and borrowing.

“Barring an outsized home price correction, many Canadian households are expected to maintain a  significant wealth cushion, which will help them to ride out the current downturn,” writes economist Ksenia Bushmeneva.

Bushmeneva’s paper is titled ‘Impact of the Pandemic on Key Canadian Household Financial Indicators’.

According to Bushmeneva, Canadian households over the past decade “built significant wealth reserves through asset appreciation”.

The TD Bank economist notes that household wealth rose 84 percent to $11.7 trillion since the end of 2009.

Bushmeneva points out that nearly half of this wealth increase is in real estate.

The economist states that as of 2019, the average net worth of a Canadian household is estimated at $800,000.

With the COVID-19 pandemic, household wealth has taken a “short-term hit”.

“Given the drop in equity prices in the first quarter and the collapse of oil prices, household wealth contracted sharply in the first quarter of this year,” according to Bushmeneva.

Although “it is far from certain, the worst may be behind us," writes the economist.

“Meanwhile, home prices have showed resilience so far in the second quarter, as sharp declines in sales have been accompanied by a falling supply of listings on the market,” Bushmeneva states.

This means that homesellers have also taken to the sidelines, keeping the market balanced, so far.

In B.C., the average price of a home in April 2020 was $737,834.

According to the B.C. Real Estate Association, the average price last month was a 7.8 percent increase compared to $684,430 of April last year.

But when compared to the average price of a home in March 2020, last month’s price was 6.5 percent less.

The average price of a B.C. home in March 2020 was $789,548.

In the TD Economics paper released on May 14, Bushmeneva notes that if “job markets start a recovery by late spring, demand should bounce off its lows and support modest gains in home prices and household net wealth”.

Bushmeneva also writes that Canadians fare better than Americans in terms of housing wealth.

“Owner’s equity makes up 74% of the value of real estate among Canadian households, nearly 10 percentage points higher than the same metric south of the border,” Bushmeneva states.

According to Bushmeneva, only 16 percent of all active mortgages held by chartered banks in Canada in 2018 had a loan-to-value (LTV) ratio higher than 80 percent.

The economist explains that this means that the “vast majority of households” have more than 20 percent equity stake in their homes.

“Owners with less than less than 20% equity in their homes will be most susceptible to a large price correction and also have limited options in terms of accessing home equity to alleviate any financial strain,” according to Bushmeneva.

Bushmeneva adds that this applies as well to renters, “who also have limited wealth or liquidity reserves to tap during the crisis”.