Housing Market and Stock Market Forecasts

Toronto Housing Market Predictions

Toronto Housing Market Forecast 2020

The TRREB August 2020 housing market stats show the market remains hot, with prices and sales continuing to soar. You can view all the Toronto home prices below in more detail.

Home sales rose 40% compared to same time last year, and prices hit another all time record. The MLS® Home Price Index Composite Benchmark rose 11.1% last month YoY.  The overall average selling price was up by 20.1% cent to $951,404.

 

Interestingly though, CMHC continues its negative outlook on the Toronto real estate market. 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, we should have had the price drop they promised would happen.

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, sales are occuring. CMHCs viewpoint seems to stand on a complete withdrawal of Federal Covid 19 aid to Canadians.  And this is a Liberal government, known for its high spending ways. A collapse of Fed support really seems unlikely.  In fact, Canada has spent much less comparatively than the US during the pandemic.

The real fear is of another shutdown due to out of control Covid 19 infections this fall.  Case numbers are rising fast however, it appears most Canadians are observing health measures. Only those within 18 to 30 are actively engaged in virus spread.

Few economists are warning of a Canadian economic collapse.  Perhaps the US election is a danger that should be noted. Today’s drop in stock prices might be a warning sign of political worry.

TRREB and Royal Lepage Keep Positive Outlook

TRREB President Lisa Patel attributes the growth to an improving economy, job growth, and low mortgage rates. Other factors might be a move away from Toronto to the suburbs to enable their work at home needs. As the Covid 19 threat continues in the city as we head into the fall many Torontonians are eager to leave the city as everyone heads indoors as the cold weather looms ahead.

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 the Montreal and Vancouver real estate markets as well.  Toronto Home prices in each district/city are updated below, showing the rapid growth in June and July.

My previous forecast of a big increase in Toronto home prices in June, July and August did happen and it seems easy to predict higher prices even into the fall season (September, October and November). CMHC called for a collapse as detailed below, but that likely would only happen as part of a Toronto housing crash.  They dynamics of a crash have changed a little in the last few years, but persistent calls for a crash in the media of course have never materialized.

If homeowners were stubbornly refusing to sell before, it appears they’re getting over their resistance.

The pent up demand from April and May is 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 in August.

 

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.

Historically, when the economy gets hot, or housing gets hot, someone pulls the kill switch, so buyers should be very careful even as they’re eager to buy a home.

As you can see in the Toronto home 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.

Toronto Home Sales Rise Again in August

TRREB recorded 10,775 home sales in August, just down from July’s sales 11,081 unit through the MLS® System.  That was – an astonishing 50.6% increase over August 2019.

May home sales were up 55% compared with April, and then in June they rose by 89% over May’s totals.   That was a warm up for July and August as single detached house sales rose another 43.7% and semi-detached sales rose 66.8%.

The average selling price for a home in Toronto was up by 20.1% year-over-year to a new level of $951, 404 (July was $943,710).  That is 10% higher than last July.  That price was up 5% from last month.

Toronto Home Sales Summary July. Screenshot courtesy of TRREB

There were 17,956 new listings in the GTA, a 24.7% growth compared to last year. Sales to new listings ratio jumped 3 points to 62%.

Active home listings in the MLS by the end of July 2020 fell by almost 16% compared to July 2019 to 15,018 homes.

New Listings August. Infographic courtesy of TRREB.

Days on market dropped 33% from an average of 36 days last August to 24 days last month.  TRREB has noted that big growth in new listings will be needed to avoid bidding wars and high prices in August and September. The typical buying season has shifted a couple of months and the fall buying season should be brisk.

Toronto Home Prices Timeline last 3 Years. Screenshot courtesy of TRREB.

Condo Sales in Toronto Were Subdued in June and July

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 still well up from last July.  That tells us demand is very high for any type of dwelling.

Screenshot courtesy of TRREB.

 

TRREB home sales details May 2020. 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.

Toronto Home Prices May

This chart below shows monthly home prices contrasted with each of the 3 previous years, which had normal real estate market drivers.

Chart courtesy of TRREB.

 

 

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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.

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.

Prime Properties To’s Zhen Liang talks specifically about house, condo, townhouse price and listing trends in Toronto.

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.

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. Instead look at the underlying fundamentals of demand and supply, as well as buyers ability to purchase.

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.

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. 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.

3 Month to 6 Month GTA Outlook

Given how well Torontonians managed Covid 19 this summer, a heartfelt congratulations has to go out to everyone in the GTA.  For not following the Democrat lead protests and deliberately spreading the virus.

With the economy still to fully reopen, and that we’re getting closer to a Corona Virus Vaccine, it’s easy to be optimistic. With immigration on hold and sufficient Corona Virus Aid (it seems), we can breathe a little easier about evictions and homelessness.

However, tightening supply is the key factor going forward.  Ontarians seem to be holding out well and more young buyers are eager to buy a home. That will push prices up by another 3% in Augusts and a further 2% in September.

 

 

With lower mortgage rates, buyers and a return of the economy in the fall, buyers will be more confident to bid on home and even condos in 2021.

The July 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 mortgage 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.

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

Toronto Home Prices May 2020

Detached Home Prices in GTA TREB – August 2020
Toronto Region Cities August 2020 July 2020 June 2020 May 2020 July 2018 Price Change last Month Price Change Last 25 Months
Burlington $1,184,945 $1,152,783 $1,097,756 $1,108,881 $983,649 2.7% 17%
Halton Hills $1,046,213 $968,572 $957,573 $946,881 $817,493 7.4% 22%
Milton $1,044,360 $1,051,963 $1,011,479 $951,008 $865,283 -0.7% 17%
Oakville $1,582,531 $1,512,007 $1,571,815 $1,393,799 $1,316,233 4.5% 17%
Brampton $989,039 $988,509 $941,869 $902,389 $818,114 0.1% 17%
Caledon $1,185,251 $1,248,730 $1,168,494 $1,108,621 $964,864 -5.4% 19%
Mississauga $1,307,832 $1,277,064 $1,228,643 $1,118,835 $964,864 2.4% 26%
Toronto West $1,270,053 $1,337,138 $1,384,009 $1,248,373 $1,056,625 -5.3% 17%
Toronto Central $2,385,278 $2,350,760 $2,307,355 $2,285,310 $2,308,516 1.4% 3%
Toronto East $1,118,506 $1,122,065 $1,119,216 $1,093,699 $969,928 -0.3% 13%
Aurora $1,259,424 $1,288,348 $1,274,838 $1,184,099 $1,064,983 -2.3% 15%
E Gwillimbury $1,023,943 $1,072,741 $1,077,136 $903,690 $931,082 -4.8% 9%
Georgina $731,183 $712,818 $732,708 $649,396 $632,831 2.5% 13%
King $1,774,480 $1,977,359 $1,821,140 $1,393,074 $1,354,955 -11.4% 24%
Markham $1,465,417 $1,407,848 $1,402,751 $1,362,795 $1,245,748 3.9% 15%
Newmarket $1,050,862 $981,114 $1,002,386 $958,270 $879,938 6.6% 16%
Richmond Hill $1,563,718 $1,526,892 $1,593,401 $1,319,645 $1,405,514 2.4% 10%
Vaughan $1,389,040 $1,382,717 $1,390,834 $1,342,946 $1,339,361 0.5% 4%
Whitchurch Stouffville $1,219,385 $1,180,167 $1,110,440 $1,314,406 $923,296 3.2% 24%
Ajax $862,454 $819,099 $796,805 $785,784 $723,095 5.0% 16%
Brock $660,183 $636,713 $625,595 $537,350 $534,553 3.6% 19%
Oshawa $672,522 $665,903 $629,826 $591,514 $616,559 1.0% 8%
Pickering $973,291 $1,044,811 $957,483 $883,788 $535,153 -7.3% 45%
Scugog $919,542 $876,562 $687,761 $628,645 $793,460 4.7% 14%
Uxbridge $1,089,997 $923,475 $853,588 $992,554 $681,613 15.3% 37%
Whitby $886,322 $827,611 $852,485 $802,190 $725,885 6.6% 18%
Orangeville $705,254 $717,564 $707,365 $696,127 $590,299 -1.7% 16%
Bradford West Gwill $874,168 $840,353 $866,240 $753,131 3.9%
Innisfil $766,834 $669,760 $632,934 $617,422 $554,226 12.7% 28%

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, 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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