Home sales and prices will continue to rise Toronto over the next few years as the market is expected to bounce back, according to a new report by the Canada Mortgage and Housing Corporation (CMHC).
The CMHC outlook forecasts Canadian housing market activity for the years of 2020 and 2021, and predicts by 2021, a home in Toronto will cost $949,400.
But overall, CMHC’s national housing outlook said that housing will start to stabilize over the next two years following two years of declines.
The report also forecasts income and population growth will support a rebound in home sales and prices.
“Housing starts are projected to stabilize in 2020 and 2021 at levels in line with long-run averages,” said Bob Dugan, CMHC’s chief economist. “This follows two years of declines from elevated levels in 2017. Resale activity and house prices are expected to fully recover from recent declines.”
In Toronto, CMHC forecasts sales of existing homes will continue to rise following their recovery in 2019.
The organization said that strong migration into the region, along with a “robust labour market and lower than anticipated interest rates” will result in significant growth in demand for homes and new listings.
There will also be significant price gaps between pre-construction and existing homes, and as a result, CMHC said GTA home prices will likely see growth in both 2020 and 2021.
As the year wraps, total new home starts will trend lower, but is expected to rebound in 2020 and 2021.
Pre-construction sales of single-detached homes have trended significantly lower throughout 2018 and these units will translate into even fewer starts in 2019 thereby dragging down overall housing starts activity, according to the report. It added that over 70,500 pre-construction units of condo units sold within the past two and a half years.
There will be continued construction activity in the Toronto region, where there remains a high concentration of high-rise projects.
The high-rises and condo market, which remains a sellers’ territory, will likely experience above average price growth, and as a result, will likely to experience “stronger average” price growth.
Along with condos, demand for rental units will remain strong during the outlook period.
“Anticipated increases in the millennial and senior populations alongside support from strong immigration inflows will ensure that the average vacancy rate remain tight and below 1.5% over the forecast horizon,” reads the report. “Over the next few years however, private rental apartment supply will grow at their fastest pace since the early 90s as strong demand will encourage more developers to supply the market will more rental units.”
In 2018 and 2019, CMHC said total rental completions surpassed 3,000 units respectively, and the last time rental completions rose above that mark was back in 1994.
“This anticipated increase in supply will help slightly ease the vacancy rate over the forecast period and help slow the growth in the average 2-bedroom rent,” it said.
With the average rent in Toronto costing the highest in the country right now, here’s hoping that is true.