Housing Market and Stock Market Forecasts

Toronto Housing Market Predictions

 

 

Toronto Housing Market Forecast

Toronto home sales hit a new record with an 8.4% increase year over year. After a tremendous year (3rd best ever) for sales (95,000) and resale home prices in the GTA region.

The year ended with a record selling average home price of $930,000 which was 11.2% higher than 2019. And there was a record 7180 home sales just for December and that was a 64.5% increase from December to December.

The average detached house price rose 42% in the 416 district to an astonishing media of $1,475,758. Houses rose 58.5% in the 905 area code to a high of $1,175,753.

Expectations and predictions are for much higher prices in 2021, as the pandemic begins to pass. The demand by cash-rich buyers is for more roomy accommodations outside the 416 area code. The only year over year drop was for condos in the 416 area code, and average price fell 4.7% there.

 

“The next 12 months will be critical as we chart our path through recovery. In particular, the impact of
resumption in immigration and the re-opening of the economy will be key.” said TRREB CEO John DiMichele.

Toronto home sales summary chart. Screenshot courtesy of TRREB.

In the third quarter comparison of Q3 2020 compared to Q3 2020, condo sales rose 10.5% and condo apartment prices to rise 8.3% to a new lofty average of $633,484. Although the pandemic hit the Toronto condo market, the damage hasn’t been too bad. It sets the table for a much rosier Toronto condo forecast for 2nd half of 2021.

Total condo rentals grew by 30% while total new listings grew 114% to Q3 2020 from Q3 2019.

Toronto condo sales 3rd quarter 2020. Screenshot courtesy of TRREB.

Toronto Home Price Timeline History Chart

Toronto home price history. Screenshot courtesy of TRREB.

The Sales to listing ratio reflects the surging home sales while prices appear to be softening as more stock is put up for sale.

Toronto sales to new listing ratio. Screenshot courtesy of TRREB.

Work from home won’t end as employers will cringe at continuing to pay Toronto commercial office rents and are buoyed by the lower cost of remote working.  Yet the exodus from the inner city in Toronto will slow as practical issues of high home costs, lack of home supply, and distance to the office take over.  Condo sales and prices are already starting to recover.

2021 Toronto Housing Market Prediction

My prediction for the Toronto housing market, is a moderation for the next 3 months, followed by strong price growth and sales from March to August.  Prices should rise another 10% by August.  This is all based on current demand and the spring economic recovery.  Canada’s 3rd quarter GDP growth was 40%. A Democrat government in the US promises to renew free trade which should be a further positive for Canada and Ontario/GTA exports.

The lack of housing supply is making finding a home in the GTA very difficult. It is real estate in Vaughan, Bradford, Newmarket, Aurora, Richmond Hill, Milton, Stouffville, Pickering and Whitby that everyone is after.

 

Interestingly though, CMHC with its Toronto real estate market crash style scenario. CHMC said Toronto (and Vancouver homes) are highly overvalued and a drop of prices in the neighbourhood of 20% is coming.  With all due respect to CMHC, they should avoid looking at fundamentals, because human market demand is an emotional thing.

With mortgage rates so low, there’s a desperation among young buyers to buy and lock in at low rates.

With Canada’s economy growing (along with the US economic rebound) amidst a stark shortage of homes, it doesn’t make sense that a price drop is coming.  Improving incomes and employment will fuel more demand, and by resuming immigration and vacation travel in Canada, demand would grow further.

Interest rates are forecast to remain low, and as inner-city homeowners sell their homes over the next 6 months, sales are occurring.

Buyers are finding opportunities in small cities outside Toronto and are able to find a way to make the move North, East or West.

Sales have been strong in the Montreal and Vancouver real estate markets as well.  Toronto Home prices in each district/city are updated below, showing the rapid growth in the last 6 months.

My previous forecast of a big increase in Toronto home prices in June, July and August did happen and a further prediction of home prices rising through September, October and November is looking good.  Let’s not forget there are Realtors and journalists calling for a collapse of the Toronto market.

The pent-up demand from April and May is still adding to the new home price inflation however, this is new demand that’s impacting prices and sales numbers. Cities such as Uxbridge, Halton Hills, and Oakville were the big gainers last August. And the trend in the 905 area code continues.

 

With mortgage rates at historic lows and loan refinancing still frequent, the market is loosening up. However, with Covid still actives, US trade tensions heightening, and the US election in two months, we’re hearing more talk about a housing market crash. And a Toronto housing market crash is possible if the US economy should collapse.

As you can see in the monthly Toronto GTA region prices and sales details, upward momentum is strong.  The growth in prices in each regions is astonishing and there is little to suggest it will slow into the fall season.

Condo Sales in Toronto Grew in November

December’s community related stats are not available right now due to shutdown issues.  I’ll post the summary when they become available to the public.  Let’s review the November stats by town or district as they are very similar.

It is the migration away from the GTA and the Covid 19 threat that is really weighing on the condo sector. However, as you saw in the TRREB charts earlier, sales and prices are on the rise.   While some are leaving, there is plenty of demand to buy their property.

Condo Sales November. Screenshot courtesy of TRREB.

Screenshot courtesy of TRREB.

 

See more on the Vancouver real estate market, Calgary real estate market, Okanagan real estate market and the York region real estate market.

 

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Looking Back at CMHC’s Forecast for the Toronto Market

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. Their argument stems from Canadian debt loads, unemployment and mortgage deferrals.

They’re not fans of the Canadian recovery however buyers should note their warning, that there is a heightened risk this fall. Perhaps not a housing crash but a correction is not out of the question given the turmoil in the US.

CMHC might be stuck with a lot of that debt, so is their forecast might be an attempt to move the market, to soften their own exposure somehow.

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.

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

See July’s Toronto home prices below.

But home buyer intent is a key matter. It’s likely that high demand vs low availability will keep the Toronto housing market intense right into 2021.

2021 Canadian Housing Market Forecast

For context for Toronto real estate 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. Fortunately, low mortgage rates are aiding in problem and helping homeowners refinance.

DBRS predicts a drop in 10% to 15% for home prices due to Corona Virus. Toronto and Vancouver 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.

Compare Toronto’s housing market outlook to the US housing market forecast.  You can view the prices for each city and MLS district below.

Toronto Home Prices November 2020

Detached Home Prices in GTA TREB – November 2020

Toronto Region Cities November 2020 August 2020 May 2020 July 2018 Price Change last 3 Months Price Change Last 28 Months
Burlington $1,298,161 $1,184,945 $1,108,881 $983,649 8.7% 17%
Halton Hills $1,077,465 $1,046,213 $946,881 $817,493 2.9% 22%
Milton $1,145,141 $1,044,360 $951,008 $865,283 8.8% 17%
Oakville $1,654,743 $1,582,531 $1,393,799 $1,316,233 4.4% 17%
Brampton $995,595 $989,039 $902,389 $818,114 0.7% 17%
Caledon $1,210,955 $1,185,251 $1,108,621 $964,864 2.1% 19%
Mississauga $1,318,779 $1,307,832 $1,118,835 $964,864 0.8% 26%
Toronto West $1,288,253 $1,270,053 $1,248,373 $1,056,625 1.4% 17%
Toronto Central $2,229,500 $2,385,278 $2,285,310 $2,308,516 -7.0% 3%
Toronto East $1,116,105 $1,118,506 $1,093,699 $969,928 -0.2% 13%
Aurora $1,318,310 $1,259,424 $1,184,099 $1,064,983 4.5% 15%
E Gwillimbury $985,154 $1,023,943 $903,690 $931,082 -3.9% 9%
Georgina $723,504 $731,183 $649,396 $632,831 -1.1% 13%
King $1,712,890 $1,774,480 $1,393,074 $1,354,955 -3.6% 24%
Markham $1,422,582 $1,465,417 $1,362,795 $1,245,748 -3.0% 15%
Newmarket $1,084,242 $1,050,862 $958,270 $879,938 3.1% 16%
Richmond Hill $1,567,242 $1,563,718 $1,319,645 $1,405,514 0.2% 10%
Vaughan $1,447,699 $1,389,040 $1,342,946 $1,339,361 4.1% 4%
Whitchurch Stouffville $1,285,465 $1,219,385 $1,314,406 $923,296 5.1% 24%
Ajax $888,892 $862,454 $785,784 $723,095 3.0% 16%
Brock $660,865 $660,183 $537,350 $534,553 0.1% 19%
Oshawa $679,771 $672,522 $591,514 $616,559 1.1% 8%
Pickering $1,044,965 $973,291 $883,788 $535,153 6.9% 45%
Scugog $858,171 $919,542 $628,645 $793,460 -7.2% 14%
Uxbridge $1,251,075 $1,089,997 $992,554 $681,613 12.9% 37%
Whitby $943,772 $886,322 $802,190 $725,885 6.1% 18%
Orangeville $711,276 $705,254 $696,127 $590,299 0.8% 16%
Bradford West Gwill $972,286 $874,168 $753,131 10.1%
Innisfil $764,040 $766,834 $617,422 $554,226 -0.4% 28%

 

 

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A quick look at the US housing trends and predictions for Los Angeles, San Francisco, Houston, Dallas, Denver, Chicago, 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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