Toronto Housing Market Predictions

Toronto Housing Market Predictions

Toronto Housing Market Forecast 2020

REMAX and the CMHC are in disagreement on the shape of the Toronto real estate market. CMHC is offering a gloomy forecast of up to 14% reduction in home prices.

Yet Remax calls CMHC recent predictions irresponsible and panic inducing. Remax argument is that although mortgage deferrals (CMHC estimates 20% of mortgage holders by September) and mortgage defaults may rise or hit a peak in a certain month, it will be short lived dip.

Remax points out the shortage of homes for sale and home owners refusal to sell at a big discount.  I think Remax forecast is more reliable, built on sales data which suggests a strong market of buyers. There a lot of people in the GTA who want to buy a home.

CMHC gloomily predicts Canada’s housing market won’t recover till mid 2022 and we won’t reach the depths of the recession until 2021. Yet, what the REMAX position on this doesn’t reflected macroeconomics — including US protectionism, low oil prices, high consumer debt and a brewing cold war with China. If manufacturing is brought back to Canada and the US however, our economies stand to gain a lot.

So the Toronto real estate forecast has many possible influences and the outcome is more political than financial.

See April’s Toronto home prices below.

Welcome to this in-depth look at the Toronto housing market and forecast along with the last few months data from TRREB. The monthly Toronto home prices for each district are below. It’s a market that’s had a lot of wrinkles for years, and due to the big shutdown, in the next 3 to 6 months those might get ironed out.

2021 looks more promising, and buyers might start to think longer term as they arise from their self-isolation depression. Never predict a market based on the current mood.

Unemployment and uncertainty could make the May and June sales numbers slide further, even though it is peak home buying season. Panic selling could easily hit too. A second wave of Corona Virus would start it.

But home buyer intent is a key matter. It’s likely that high demand vs low availability will keep the Toronto housing market intense.

Canadian Housing Market Forecast

For context for Toronto market against the rest of Canada’s housing markets, is this chart/forecast from TD Bank. They’re predicting a very big return of home sales in 2021, yet moderate price gains for the most part. Toronto’s outlook looks best with a slightly lower price rise.

Screenshot courtesy of TD Bank.

CBA Reports High Number of Mortgage Deferrals

The Canadian Bankers Association reported almost 500,000 requests for mortgage deferrals or to skip a payment were accepted in March throughout Canada. There over 720,000 mortgages deferred up to April 29. That’s almost $1 Billion per month and CBA says the numbers will increase in May and June.

CBA didn’t report the latest mortgage delinquencies. The report shows upswing in the last 2 quarters of 2019 when the economy was good. With a 15% unemployment rate snowballing, we can imagine what the charts look like now.

DBRS predicts a drop in 10% to 15% for home prices due to Corona Virus. Toronto won’t be exempted and should the Canadian dollar rise as expected, it will weigh on the Ontario economy, pushing unemployment higher and for an extended period. It could be this recession is not yet believed by most Ontarians.

DBRS went on to say the national unemployment rate will decline to 7.5-8.0% by the end of 2021.” That’s 20 months from now.

On the bright side for pre-qualified buyers, is a price slide. All that’s needed is for sellers to list their homes, but April’s listing numbers were as low as they could get.

TRREB reports in the newly released data for April, that sales declined by 2/3rds YoY, and detached home prices dropped 11.2% from March 2020. See the full monthly GTA & Toronto home prices changes below. The trend is typical of all housing market forecasts.

3 Month to 6 Month GTA Outlook

The big issue ahead is how deep unemployment will sink in the GTA area, and whether a new wave of Covid 19 cases will appear. Infection rates remain high, and with good weather appearing, Torontonians might not be able to stay safe.

Infographic courtesy of TRREB.

If we had a healthy real estate market, you might expect home prices to drop.  A decline of $100,000 for homes and $50,000 for condos over a three month period of high unemployment, income loss, job insecurity, and work shutdown isn’t outrageous.  This month’s home price drops point to more price declines ahead, even as buyers can begin searching again. The spring buying season should help a bit but this market is on life support.

Home Prices rose slightly in April. Yes, it’s a reminder that buyers are optimistic and there really is an unacceptable lack of home listings from Oakville to Mississauga to Brampton, Richmond Hill and Markham to Scarborough to Oshawa.

April 2020 Stats

TRREB home sales in April counted 1412 units sold, about 30% of March’s were 3,369 homes sold the biggest decline percentage wise, ever.

Toronto Home Sales April 2020. Screenshot courtesy of TRREB.

For comparison, here are the March numbers:

Toronto Home Sales March 2020. Screenshot courtesy of TRREB.

During the month of April, new listings dropped to 6,174 from 14,424 homes in March.  The MLS HPI benchmark price dropped 9.9% from $902 680 vs March’s average home price of $821,392.

Now into April, you can see how Corona Virus affected sales have trended. This chart courtesy of Toronto Realtor Simmi Minhas shows home sales are 16% of last months. The final tally for the month proved to be a little higher than.  But the trend is clear, Toronto home prices and sales are dropping a trend that is evident in all housing markets.

Yet another report on virtual showings suggested that 30% of showings are now online.  Some buyers are actually buying without an in-person visit.  Everyone knows demand is there, which keeps prices from dropping too much. Check out home prices right now on Simmi’s website:

Screenshot courtesy of Simmi Minhas, Remax Realtor in Toronto

TRREB’s Jason Mercer had forecasted that housing prices in Toronto weren’t sustainable. Well, the shutdown period is finally reflecting that.

Give high rising unemployment trends, tighter mortgage qualifying, and many potential buyers eating their downpayments, the May stats will likely see another big drop. It will take more than physical in person showings and buyer optimism to actually complete a home purchase in May and June.

Nevertheless, with lower mortgage rates buyers and a return of the economy in the fall, buyers will be more confident to bid on home and condos in 2020.  The March housing stats for the GTA can be viewed below. Also see the Toronto Condo market update. Compare Toronto’s housing market outlook to the US housing market forecast.


Projections for the Full Year 2020

TRREB forecasts 97,000 sales in the TRREB market in 2020, yet they do mention the lack of listings available.  As we head to 2021, the housing market across the GTA from Oshawa to Newmarket to Mississauga the price competition will heat up.

New construction has been slowed and post Corona Virus, financing might not be available easily.  There is word the banks are already raising mortgage qualifications.  Low mortgage rates might not be enough this go round.  There might be another round of mortgage and debt refinancing as consumers work through this period of lower income.

Rising prices are also threatening the Toronto condo market, where investors are struggling to meet their financing costs, against a backdrop of renters who won’t be able to keep up with sky high rent prices.

Condo investors are buying condos for renting and in many cases letting them sit vacant unless they get their price. There are many factors inflating what looks to be a housing bubble in Toronto.

Will you be buying or selling a property?  According to a Toronto Star survey, 46% of respondents say they won’t be buying. Most have access to only the low end of the market, and sales are actually rising in that segment, yet listings are drying up.

Sales Jumped While Listings Disappear

The latest TREB report reveals prices in February rose a brisk 15.4% over last February 2019. It may be that buyers are very eager, early into the 2020 selling season.  Demand is the top issue now.  A perfect wave of forces are pushing buyers young and old into the market, for record price levels as you can see in the February stats below.

Toronto Home Listings March 2020. Screenshot courtesy of TRREB.


Toronto GTA Home Price History. Chart courtesy of TRREB.

An earlier prediction from housing economists for a 4.5% home price jump seems laughable at this point. They’re no doubt back with their calculators right now.  Although sales and prices seasonally adjusted are similar, it is demand that is changing in 2020.

Buyer demand filters through via strong job market, more buyers with down payments, affordability up, mortgage rates low and easy loan qualification from the banks.

You can view the prices for each city and MLS district below.

Toronto Home Prices April 2020

Toronto Detached Home Prices (GTA). Data courtesy of TRREB.


Continue to Part 2 of the Toronto Housing Market Forecast.

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A quick look at the US housing trends and predictions for Los Angeles, San Francisco, Houston, Seattle, and Florida, tell you the US is hot. Check out forecasts for Boston, New York, Miami, and San Diego.

Homebuyers are still willing to look beyond the green spaces belt, but they’ll look at Aurora, Bradford, Stouffville, and Newmarket first before heading north.

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