Toronto Housing Market Predictions

Toronto Housing Market Predictions

Toronto Housing Market Forecast 2020

On the stock markets, real estate stocks are taking a beating from the Corona Virus response. With stock markets forecasts bleak and work stoppages, this is not the right time for most to buy a home. As dire as it seems now, the Toronto housing market will rebound.

Toronto region MLS and agents aren’t reporting steep drops yet but we know buyers are withdrawing. Many people in the GTA are fearful of job losses as companies and buildings are closed. The collective financial hit has registered with most people.

We have the 2004 Sars epidemic to compare to. Sales were depressed then until July when they shot up. This shutdown however and the reduction in economic activity will shake everyone.  This means a huge drop in Toronto home prices is already underway. For those certain of their employment situation, they could find buying right now a great decision.

They might also like the upside in the stock market as once in a lifetime bargain stocks appear. Check the Stock Market Forecast right right now to investigate that alternative.

February is in the Rear View Mirror

February’s home sales jumped 45.6% from February of 2019. Another positive sign for a great spring market comes from the rise in sales from January — up 14.8%.  TREB is calling for almost 100,000 home sales for 2020 and for price growth of 10% this year — to an average of $1 million in the GTA.

TRREB reports that the MLS® Home Price Index Composite Benchmark rose by 10.2% and the average selling price for all home types rose 16.7% to $910,290.  Sales of detached homes rose 44.8% year to date compared to last year, while condo apartments rose 17.4% YTD comparatively.

TRREB’s Jason Mercer forecasted that housing prices in Toronto aren’t sustainable. Nevertheless, with lower mortgage rates buyers are more confident to bid on home and condos in 2020.  The February 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.

Is it a Price Bubble?

It’s been called a price bubble by many, and with so few active listing, the price inflation could be dangerous. With mortgage rates on the decline, homebuyers will be willing to bid it up to own their own home. However, given the Corona Virus, the new question is, when will the Toronto housing market crash?

infographic courtesy of TRREB

TRREB forecasts 97,000 sales in the TRREB market in 2020, yet mentions the lack of listings available. TRREB President Michael Collins says the current price growth is not sustainable. An ever widening gap between supply and demand will make finding a home very difficult and you’ll likely be involved in bidding wars.

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.

TRREB sales history timeline. Courtesy of Trebhome.com

An earlier prediction from housing economists for a 4.5% home price 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 comes from a strong job market, more buyers with down payments, affordability up, mortgage rates are heading down, and the USMCA deal looks like a done thing.

Toronto Real Estate Market Report

8,914 home sales occurred within the TREB MLS® System in January 2020 and up 14.8% compared to February and 31.% over last month.  The MLS® HPI Composite Benchmark rose 8.7% compared to January 2019 and the average price rose 12.3% to $902,673, from last years $775,788 average price. and up 3.1% from last month.

Speculators love this kind of market pressure and that will draw even more money to the Toronto real estate market.

The February 2020 report from TRREB (see the latest February housing stats) reveals strong sales and price gains, but against ever decreasing listings. Will this create the much anticipated Toronto bubble crash? Over-indebted young buyers who make up more of the market. Or is the US/Canadian economy headed for clear sailing for the next 5 years?

Screenshot courtesy of TRREB

Why Are There So Few Homes for Sale?

That topic has been discussed well on this housing blog for many years now.  Not enough pressure has been put on government to promote housing market health. Instead, political philosophies have suppressed the market and now these shortages are setting up a worst case scenario — a Toronto housing bubble that even the economy may not be able to save (higher mortgage rates).

Listings and new listings plummeted in December, a trend that will color the Toronto Housing Market throughout the next 5 years.  Buyers could get desperate again, given that even the rental market has dried up. Not possessing a 700 credit rating and not owning a home could spell homelessness for many GTA residents in 2020.

Particularly in Toronto’s suburbs where demands eats up anything built. Millennials have cramped for years in their urban condos and rental apartments, and they’re looking to grow out into Mississauga, York Region, Halton, and Durham regions. With low housing supply, continued immigration, and stronger millennial demand, we should see house prices jump much higher than the 4.5% predicted for 2020.

Toronto Home Prices on a steepening curve this season. See the latest home prices for January.

Chart courtesy of trebhome.com

CMHC recently moved the 2020 Toronto housing market out of its “red zone” for the first time in 3 years. It appears first time buyers and immigrants are powering up sales. Economically, the signing of the USMCA agreement should settle the nerves of Toronto employers.

ZooCasa discovered that 8 Toronto neighborhoods have seen their sales prices double in the last 5 years. 22 other neighborhoods saw their prices rise 50% to 99% during that period.

It reminds us of how the Toronto housing market is girded for higher prices by government restrictions. As long as those building regulations, zoning and development restrictions exist, the price will rocket further. New developments such as the new city in Innisfil and big developments in Barrie and York Region won’t satiate the pool of buyers in TO.

Shrinking Home Listing vs Rising Demand

New listings in the GTA reversed trend and rose 10,613 and active listings dropped 33.6% to 8,816 homes.  For the past decade, annual new listings have lagged between 150,000 and 160,000 units.   Will new construction supply enough housing to satisfy demand, or will home prices rocket upward this spring?

Investment Condos Toronto

Looking at investment condos in Toronto in 2020? Condo sales hit 239 in the city of Toronto and 648 units across the GTA via the MLS.  There were 590 condo townhouse sales across the GTA in September and 233 in the city of Toronto.  See previous reports on Toronto investment condos.  TREB will release data on condo sales in the coming months. The 4th quarter condo data is available.

See more detailed Toronto housing stats below.

 

See more Toronto housing market stats below.

Vancouver and Calgary are suffering massively due to political posturing and BC trade blockades. With so many Millennials wanting to buy a home, something is going to give. Just in the case of the Los Angeles, San Francisco, and San Diego Housing markets, anger is building.

TRREB’s 2020 outlook: Incoming new TREB President Michael Collins believes change is in the offing, “Over the next year, as demand for ownership and rental housing continues to grow, my hope is that we will see more movement from policy makers on two fronts: alleviating the constrained supply of housing and providing more flexibility around demand-side policies, including the OSFI two percentage point mortgage stress test and allowable amortization periods on insured mortgages,” said Mr. Collins. This contrasts to Vancouver new home start collapse of -18% to only 334 new units. Read more on the Vancouver housing market which like Calgary, is suffering badly.

 

Sales to new listings ratio is steepening showing an eager apetite for any homes that appear.

Chart courtesy of TRREB

 

Toronto Home Prices

We are experiencing annual rates of price growth that are largely sustainable right now in the GTA – above the rate of inflation, but in the single digits. If, however, we continue to see growth in sales outstrip growth in new listings, price growth will accelerate.” sais TREB Chief Market Analyst Jason Mercer.

What Caused the May/June Bump in Home Sales?

  1. buyers estimating that now is a good time to buy
  2. buyers expect prices will rise strongly over June and July
  3. buyers have more money for down payments
  4. buyers see mortgage rates potential falling
  5. trade deal with US appears to be stronger
  6. employment rates are strong in the GTA
  7. there are properties for sale
  8. long winter created lower sales for a longer time

 

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See all current Toronto Home Prices below.

The stats and graphics below show conclusively that the Toronto housing sector was dealt a death blow in 2017.  We’re left to deal the consequences such as low housing availability, high prices and rents, and a weakened economy. The Toronto condo report is a little more positive given demand for rentals and lower priced condominiums.

As you’ll see below, housing prices (and rents, cost of living and taxes) have risen although government promises were the opposite. Forecasts have been for mild sales and price increases, yet a lack of housing is the main reason why those predictions are unlikely.

The Teranet Home Price Index for Toronto

Teranet House Price Index courtesy of housepriceindex.ca

The Teranet HPI index is up 2.8% in the last year, well behind that in Hamilton (+4.8%), Montreal (¬5.4%) and Ottawa-Gatineau (6.3%), yet much better than Vancouver’s at -4.9%.

Lots of Eager Buyers

Prospective buyers are on the sidelines. Many believe the best time to buy is when the market crashes. That’s not likely this year. Huge government and consumer debt are definitely playing into the scenario and trade relations with the US are worry.

TREB indicates there are still plenty of active buyers and there are reports of bidding wars on some properties. The Liberal government said they would resolve the housing crisis, and so far PC leader Doug Ford is not rectifying the high prices and lack of availability.

This chart from TREB shows sales over time. At a time when economies were booming, Toronto’s housing sales were crushed. Housing is a key component of the Canadian economy. There’s no better stat to tell you what the politicians did to Toronto, than this one:

TREB’s affordability chart shows even that has taken a turn downward as well.  It seems none of the current political parties are willing to resolve housing issues anywhere in Canada.

Take a quick look at the Vancouver housing market and at energy issues for Calgary’s housing market.  What is the end benefit of not permitting new housing, especially the “missing middle” type of home?  Montreal’s housing market, the best performing Canadian housing market, helps us see how a more open minded political approach pays off. Businesses would rather go to Montreal or Ottawa now.

TREB keeps calling for the eradication of Federal, Provincial and municipal policies that make housing development impossible. And when housing and banking regulators call real estate investors “speculative, money laundering, law breakers” it’s an obvious attempt to suppress housing growth and trivialize the real estate market plight.

The GTA market is still a big market and only the Montreal housing market has a chance to outperform the GTA housing market through 2020. Housing markets in Calgary and Vancouver are down significantly.  However, the fall market is normally subdued, and buyers are likely waiting to see how the US elections pan out and whether the US housing market and economy will continue growing.

And as Toronto’s housing market goes, so does Mississauga, Richmond Hill, Brampton, Scarborough, Markham, Vaughan, and even Newmarket, Bradford, and Aurora.

There’s a lot of talk about rent controls in Toronto rental market, yet we know what damage that will do to housing development and contribute to even higher prices. With the economy improving, and a cessation of building in the GTA, rents will likely take a big jump by spring 2020.

There are lots of reasons why homeowners won’t sell and number one is that they have no where to go.

Toronto’s unemployment rate remains stubbornly high at above 6%. The Bank of Canada continues its messaging about higher interest rates and this would impact sales and construction in 2019/2020.

New Housing Starts Toronto

Screenshot courtesy of Ycharts

With new construction slowed, mortgage stress test, Ontario job losses, and Canadian economic uncertainty, demand for homes in the GTA should fall. However, in many parts of the city of Toronto, prices may not fall much.
This graphic courtesy of Teranet house price index shows Toronto home prices have just about recovered from last year’s collapse, a significant psychological event.

 

New single-family home prices in November sold for 6.6% less ($1,075,215) while new condo prices rose 10.2% to $866,827 over last November.

See the full housing stats in this detailed report of the true picture of the Toronto real estate market and for the Toronto condo market outlook.

Predictions: Housing Market Crash?

Given how strong demand in the GTA is, a Toronto housing crash is little outlandish.  Despite issues related to the Federal and provincial governments, the enormous unfulfilled demand for housing (i.e. affordable housing) will ensure prices continue upward.  While the stress test rules are blamed, it may be the economic uncertainties of Ontario and Canada that are dampening buyer spirits.

When will home prices fall?  Some cities in the US and Canada may see lower prices in 2020, but most are headed for much higher prices.

The much prophesied US housing crash and China housing crash haven’t happened either so maybe this spirit of optimism in Toronto will conquer all of the tariff strife? (Okay, Trump does love Tariffs).

Should you Call a Realtor and Sell Your Home? It’s a good time if you have a plan and somewhere to go. Try this to sell your house fast and for more.

Housing is Critical to the Ontario Economy

If Ontario’s economy should falter, a shaky GTA housing market could send it plummeting.

Housing Market Taxes

Graphic courtesy of TREB and the new MARKET YEAR IN REVIEW & OUTLOOK REPORT for 2018

The Canadian government hasn’t come up with a plan to stop investment money fleeing to “low tax” United States.  The US economy and the US stock market and USD have all soared with Trump’s strategy. With the border blocked, there will be no reason to invest in Canada. Trudeau has refused to look at tax reductions. That has severe implications for the financial markets here.

If not for the Toronto Condo market, the Toronto housing market would be very stressed?

 

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Teranet Home Prices

Teranet released its market report on July home prices in Toronto, Vancouver, Calgary and other Canadian cities.  Price growth has abated yet home prices remain high and unaffordable.

Teranet Home Prices

Check out the Vancouver and Calgary forecasts too as they reflect on Toronto (And Share on Facebook!).

While the talk was about rocketing house prices in Toronto, the Toronto condo market is doing okay and the demand for new construction condos is still brisk.

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

Toronto Home Prices February

Detached Home Prices in GTA TREB – February 2020
Toronto GTA Cities Feb 2020 Jan 2020 Dec 2019 July 2018 Price Change last Month Price Change Last 18 Months
Burlington $1,109,944 $1,038,386 $1,037,571 $983,649 6.4% 11%
Halton Hills $953,067 $898,540 $860,364 $817,493 5.7% 14%
Milton $964,578 $963,829 $902,745 $865,283 0.1% 10%
Oakville $1,530,059 $1,368,664 $1,367,226 $1,316,233 10.5% 14%
Brampton $968,313 $870,970 $892,185 $818,114 10.1% 16%
Caledon $1,052,817 $1,133,779 $1,068,608 $964,864 -7.7% 8%
Mississauga $1,233,623 $1,187,718 $1,221,652 $964,864 3.7% 22%
Toronto West $1,230,229 $1,204,688 $1,155,189 $1,056,625 2.1% 14%
Toronto Central $1,230,229 $1,996,167 $2,157,650 $2,308,516 -62.3% -88%
Toronto East $1,067,843 $1,050,143 $944,621 $969,928 1.7% 9%
Aurora $1,100,425 $1,088,715 $1,046,599 $1,064,983 1.1% 3%
E Gwillimbury $873,167 $892,690 $784,700 $931,082 -2.2% -7%
Georgina $577,677 $585,884 $555,089 $632,831 -1.4% -10%
King $1,390,516 $1,484,182 $1,557,519 $1,354,955 -6.7% 3%
Markham $1,387,802 $1,199,087 $1,338,963 $1,245,748 13.6% 10%
Newmarket $944,969 $886,463 $897,347 $879,938 6.2% 7%
Richmond Hill $1,370,967 $1,431,128 $1,367,975 $1,405,514 -4.4% -3%
Vaughan $1,418,885 $1,345,393 $1,335,099 $1,339,361 5.2% 6%
Whitchurch Stouffville $1,057,131 $1,051,631 $1,068,149 $923,296 0.5% 13%
Ajax $788,689 $783,519 $761,604 $723,095 0.7% 8%
Brock $512,991 $586,940 $641,658 $534,553 -14.4% -4%
Oshawa $673,611 $609,773 $600,709 $616,559 9.5% 8%
Pickering $625,618 $875,998 $822,866 $535,153 -40.0% 14%
Scugog $745,185 $677,931 $741,544 $793,460 9.0% -6%
Uxbridge $926,654 $1,073,295 $781,520 $681,613 -15.8% 26%
Whitby $790,034 $765,192 $745,104 $725,885 3.1% 8%
Orangeville $666,746 $648,247 $667,516 $590,299 2.8% 11%
Innisfil $615,000 $661,672 $651,084 $554,226 -7.6% 10%

Some smart buyers are looking at financing solutions that give them a shot at rental income. Real estate investors in Toronto, Vancouver and  even Calgary are focused on rental income investment properties.

What is the most notable change? It would have to be Toronto condos. Sales dropped by 15% yet condo prices rose by 23% across the GTA.  When the selection of lower priced condos are gone, we’ll see a renewed surge in prices as buyers hunt the luxury market to see what they can get.

Are you considering using a HELOC to do a house renovation?

Considering buying or selling? Take a look at some of home buying tips and home pricing tips posts and this new post on the best renovations to grow the price of your house for saleFirst Time buyers should remember that house prices always climb even through recessions as you’ll see in the graphics and housing data below.

Consider this your most up to date report on the Toronto Real Estate Market – lots of food for thought below. Enjoy the monthly price charts below which may help you decide whether it’s time to sell your house.  Also see the Mississauga real estate forecast if you’re out in Mississauga, Milton, Oakville or Brampton.

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Are you Ready to Sell Your House?

You’ll want to start reading my how to sell your home tips posts and a little on over asking bidding wars because even right now, multiple offers are still common.

The Toronto situation seems to mirror the US housing forecast only with troublesome government meddling in TO. Experts suggest it is government action that causes the markets to suddenly slide out of control.

What’s Compelling about the Toronto Housing Market?

Toronto is a high value housing market similar to New York City or the Bay Area of California, and TO is a city destined to be a super city.  It’s unlikely that a property purchase in Toronto will be a disappointment over the long run. If you see the Toronto home price charts, you’ll notice that prices have climbed in the last 18 months. So buyers have not lost their equity.

And detached house prices will rise much further due to a severe housing shortage, improving economy, and rising population.

Despite the Ontario government’s new foreign buyers tax threat, demand for housing won’t fall. As the loonie falls in value, Toronto home prices turn out to be reasonable internationally, and may be a worthy investment for rising wealthy Americans. Canadian real estate is still a good alternative to US Real Estate in 2019/2020.


While many buyers would like to live in Central Toronto, Oakville and Milton the prices in these cities is prohibitive. Instead, buyers are looking north to Vaughan, Newmarket, Aurora, Bradford, Barrie, Innisfil, and East Gwillimbury.

 

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Huge new housing developments in Bradford, Newmarket, Aurora, and Vaughan are still selling well, but the market in the 905 area code has cooled. That means bargains are waiting.

TRREB’s districts include Mississauga, Oakville, Vaughan, Newmarket, Aurora, Richmond Hill, Markham Bradford, Scarborough, Brampton, Oshawa and Milton.

The 17 Key Factors Driving Toronto Housing Market:

      1. severe shortage of housing stock in the GTA region
      2. rising demand from buyers who have been renting
      3. easing FSTI rules to allow more buyers to afford condos
      4. restrictions on development land for housing
      5. Trump and NAFTA free trade deal and implications for Toronto’s automakers
      6. Canadian dollar beginning to fall – good for jobs
      7. oil and energy costs beginning to fall — good for home owners
      8. rising numbers of millennials hunting for an affordable home or condo
      9. bank of mom and dad continues funding kid’s home dream
      10.  mortgage rates falling — good for home buyers
      11. Toronto and Ontario land transfer taxes inhibiting purchasing
      12. rates of employment and income
      13. business investment in Ontario continues falling – NAFTA cancelled and Canada suddenly alone
      14. consumer debt loads and credit ratings
      15. further federal restrictions on first time buyers/down payments
      16. commuting distances and new construction in York region and Vaughan
      17. recession likely ever going to happen

Investment Rentals are Big Money — How About Rental Income Property?

Are you going to buy rental income property as an investment in 2020?  Check out cities in the US where there is a much better upside in profit.

As we progress to 2020, emotions are going to run high as the critical factors you can read about below become intense.

What are the Causes of High Home Prices in Toronto?

The major factors that drive housing demand growth to Toronto: immigrant investors, better economy, low interest rates, increasing numbers of buyers in their home home buying years (millennials), and optimism all look on the upswing.  As mentioned in the Los Angeles Real Estate and US housing crash post, forecast post, here are the key factors that affect home prices:

Housing Demand – High overall demand – “all cash bidding wars” in some cases

Housing Supply – Throttled, supply is far from what’s needed

Developable Land – Throttled by government which is the single biggest factor

Builder Red Tape – Builders can’t build even if they have funding – high exposure to financial loss

Mortgage Rates – Continuing Low, especially in light of global economic slackening and with recent tightened lending rules

Down Payment and mortgage rules – these are being tightened this taking some pressure off of the purchase market and re-routing it to the rental market (people have to live somewhere)

Toronto Region Employment – moderate and remaining moderate despite Federal infrastructure

Taxes – rising quickly due to Ontario government and federal government spending

Buyer Income – moderate and not rising much

Home or Condo Prices – High and rising fast – out of reach for most buyers

Demographics – Millennials coming into family and home buying years and must begin to acquire their own living space

Number of Renters – increasing fast because of tight mortgage lending rules

New Home Construction: limited because of Green Spaces Act, but is a source of supply

Economic-Foreign Trade – Canada struggling and Free Trade agreements now being scrutinized because they don’t see to be working like they used to

Taxes on Sale of Home – huge tax burden for those selling in the city of Toronto

 

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A quick look at the US housing forecast 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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22 years of experience as a content researcher, strategist and SEO expert for marketing agencies and his own company. Gord's investigation into housing markets, stock markets, and AI marketing strategy helps clients achieve market dominance. Some of Gord's blog posts have achieved half a million pageviews with over 7,000 social media shares, revealing Gord Collins special talents for building reach and impact. Visit the AI Marketing website for an introduction to the AI marketing era. Artificial Intelligence is lending extra benefit to the power of marketing software which is enhancing SEO, Copywriting and Sales. Gord offers a new brand of SEO services and to regain his reputation as a leading SEO expert. See his 2nd book which describes the powerful relationship between SEO and Content Strategy. Gord's passion is researching algorithms, trends, forecasts, and market statistics to establish clients at the top.

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