CMHC’s 2020 Housing Market Outlook calls for housing starts to stabilize over the next two years following two years of declines. The release also forecasts income and population growth that 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.”
According to CMHC, starts for single-detached and multi-unit housing types will remain below the peaks seen in 2017 (for single-detached starts) and 2018 (for multi-unit starts).
The release expects existing home sales to stay near their 2018 levels until the end of 2019. Home sales will increase in 2020 and 2021 offsetting the declines observed since 2016, reflecting household disposable income growth.
The average MLS price is anticipated to decline for a second consecutive year from the recent high registered in 2017.
CMHC suggests that positive price growth may resume in 2020 and 2021, driving the average price above its 2017 level by the end of the forecast horizon. Household disposable income growth and rates of household formation will support price growth.
In British Columbia, favourable economic and demographic conditions will support relatively strong growth in housing starts, while Ontario and the Prairies will see growth in starts, but at low levels. Housing starts in Québec and the Atlantic region are expected to trend lower over the forecast horizon.
Ontario and British Columbia’s 2020 and 2021 outlook for sales growth is comparatively strong to other regions. Ontario will also lead price growth in 2020 and 2021, with Québec showing firm price gains in both years.
“British Columbia will see modest recovery in price growth in 2020 from a decline in 2019, but rise to the second highest rate of price growth after Ontario in 2021. Other regions will generally see modest gains over the forecast horizon in comparison to Ontario, Québec and British Columbia,” says CMHC.
In terms of outlook risks CMHC continues to see vulnerabilities related to international trade tensions and high household indebtedness, which present risks to economic activity and housing market stability.