2020 home sales in Canada forecast to recover from "slump"

Jan 2 2020, 9:50 pm

As another year begins, a new report from Zoocasa is shedding light on what current and prospective homebuyers can likely expect when it comes to real estate in Canada.

In its report, Zoocasa outlined what it said are its top five predictions for 2020 in a number of areas, including home sales, price growth, and mortgage rates.

At the top of the list is the prediction that home sales will continue to recover from the “slump” in 2018.

“Canada’s housing market has come a long way from its 2016-2018 boom-bust cycle,” the report said. “After sustaining roughly two years of softer sales and price growth following the introduction of the federal mortgage stress test, as well as provincial taxes and policies in Ontario and British Columbia, demand for homes for sale found its footing in the second half of 2019. ”

Both BC and Ontario are also expected to “lead housing market growth” in the country.

Citing the Canada Mortgage and Housing Corporation (CMHC) Zoocasa said BC sales are expected to jump 20% to 22.6% with 74,600 to 84,400 transactions, with prices up 2.8% to 3.6% at an average of $675,000 to $749,500.

In the Ontario real estate market, sales will hit between 204,200 to 213,800 units (+4.2 – 7.3%), with prices between $614,000 to $633,700 (+5.4 – 6.5%).

In Alberta, 2020 sales will hit between 52,300 to 56,900 units (+4.1 – 4.2%), while prices will inch up to the $379,700 to $383,400 range (+1.9 – 2.9%).

Quebec will continue to experience stable sales growth and faster-than-average price surges; Here, Zoocasa said the CMHC is forecasting a total of 91,500 to 96,500 transactions in 2020 (+0.3 – 2.5%), with the average price between $341,000 to $348,000 (+6.2 – 6.4%).

For 2020, Zoocasa said it will be a “seller’s market” – especially in the Greater Toronto Area. (GTA).

“Strong population growth in the GTA coupled with declining negotiated mortgage rates resulted in sales accounting for a greater share of listings in November and throughout the second half of 2019,” said Jason Mercer of the Toronto Real Estate Board. “Increased competition between buyers has resulted in an acceleration in price growth.”

Zoocasa said it also expects mortgage rates to “remain cheap.”

According to the report, the Bank of Canada “has kept mortgage interest rates relatively low and stable for the entirety of 2019, keeping its trend-setting overnight lending rate at 1.75% in each of its eight announcements.”

As a result, “banks and credit unions were able to keep their variable mortgage and line of credit products competitively priced.”

Due to this, “borrowers have had access to some of the lowest mortgage rates on record in 2019 – and this is likely to persist throughout the new year.”

According to the report, Not only will rates remain cheap, but it might get easier to qualify for a mortgage altogether.

This prediction, Zoocasa said, is based on “renewed scrutiny for the mortgage stress test.”

Zoocasa noted that last month, “a letter from Prime Minister Justin Trudeau indicated Federal Finance Minister Bill Morneau will take a second look at the controversial test’s criteria, and potentially make tweaks to allow for more flexibility when qualifying borrowers. ”

And while no details have yet been released, Zoocasa said this could include lowering the qualifying rate from its current 5.19%, or making it more dynamic based on individual borrowers’ profiles.

Daily Hive StaffDaily Hive Staff

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