The RE/MAX 2020 Housing Market Outlook Report forecasts the highs and lows of the Canadian housing market will level out in 2020 with an estimated 3.7 per-cent increase in the average residential sales price.
Most individual markets surveyed across Canada experienced moderate price increases year-over-year from 2018 to 2019.
Some regions in Ontario continue to experience higher-than-normal gains, including London (+10.7 per cent), Windsor (+11 per cent), Ottawa (+11.7 per cent) and Niagara (+12.9 per cent).
“Southern Ontario is witnessing some incredibly strong price appreciation, with many regions still seeing double-digit gains,” says Christopher Alexander, Executive Vice President and Regional Director, RE/MAX of Ontario-Atlantic Canada. “Thanks to the region’s resilient economy, staggering population growth and relentless development, the 2020 market looks very optimistic.”
As more Canadians have adjusted to the mortgage stress test and older Millennials move into their peak earning years, it is anticipated that they will drive the market in 2020, particularly single Millennials and young couples.
Consumer confidence in regions like Vancouver West in early 2019 was extremely low throughout the year, resulting in an average residential sale price drop of 7.5 per cent, from $2,272,922.50 in 2018 to $2,103,234 in 2019.
Consumers have acclimatized to regulation adjustments, specifically the mortgage stress test, and consumer confidence has begun to return. This trend is expected to prevail in 2020, with prices expected to rise four per cent.
Fraser Valley also experienced a price drop of almost four per cent year-over-year, from $724,740.50 to $696,502.50.
RE/MAX expects the region to witness substantial growth, particularly in downtown Surrey, due to the high number of real estate developments catering to businesses and educational institutions. First-time buyers are anticipated to drive the market in 2020 due to the relative affordability of the region compared to Vancouver proper.
“The drop in sales in some key British Columbia markets represents the last of the ‘down’ market spillover from 2018,” says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada.
Alberta continues to experience slowing economic conditions, which have contributed to a decrease in average residential sale prices in Calgary, from $478,088 in 2018 to $460,532 in 2019.
RE/MAX states that condos are the easiest way for first-time homebuyers to get into the market, with starter units going for as low as $150,000. While the city’s unemployment rate continues to remain high compared to the rest of Canada, the population is increasing, with more people moving to the city from other parts of the province.
Winnipeg has shown a small increase in average residential sale price, both for freehold and condominium properties, by 1.5 and 0.8 per cent.
The number of sales also increased by five per cent, from 8,139 in 2018 to 8,539 in 2019. Immigration to the city, in combination with reasonable prices and ample supply of inventory, is expected to drive sales going into 2020.
Regina also saw the number of sales increase by more than five per cent year-over-year, despite being one of the few markets where the effects of the mortgage stress test are still being felt. The Prairies are seeing a mix of buyer’s and balanced markets.
Toronto is set to experience a strong housing market in 2020. Lower unemployment rates, economic growth, and improved overall affordability in the Greater Toronto Area are expected to drive the market forward.
The estimated average sale price increase for 2020 is six per cent, two points higher than the growth experienced between 2018 ($835,422) and 2019 ($880,841).
The city saw 76,413 transactions in 2019, up 12 per cent from last year (68,064). While Toronto is experiencing its “busiest” construction season ever, housing supply still falls short of the demands of the city’s rapidly growing population.
Ottawa and Windsor showed substantial increases in average residential sale prices at 11.7 and 11 per cent.
This strong growth is expected to continue into 2020, with Ottawa’s new LRT system impacting surrounding development and Windsor’s continued affordability attracting young professionals to the area.
The Niagara region is also showing strong growth, with average residential sale price increasing almost 13 per cent, from $378,517 in 2018 to $427,487.50 in 2019.
In Atlantic Canada, Halifax and Saint John have experienced solid price appreciation of six and five per cent. Affordability continues to attract many buyers in the region, most of whom are buying single-detached homes, according to RE/MAX.
At the same time, retirees are driving the region’s condominium market. Conversely, the market in St. John’s is expected to recover in 2020, with increased consumer confidence expected to bring about stabilization.
However, the city’s aging population and high rate of outbound migration is expected to have an impact on housing market activity at some point.