The Canadian Real Estate Association (CREA) extended and updated its resale housing market forecast, calling for a rebound in activity in the second half of 2018.
With interest rates expected to go up this year and the effects of the new mortgage stress test for down payments of 20% or more, mortgage financing has been and will continue to be a challenge for buyers.
The CREA expects some buyers to remain on the sidelines for the first half of 2018 to save up for a larger down payment and to wait and see what happens with interest rates. As uncertainty fades, housing activity should see an uptick in the summer.
With a slower start to the year than expected, the CREA has lowered its forecast for home sales and average price. Expect national home sales to dip 7.1% to 479,400 units in 2018, largely due to weaker sales in British Columbia and Ontario. High prices and supply shortage are significant factors in the fewer home sales in these two regions.
The CREA predicts the national average home price for 2018 will decrease 2.3%, compared to 2017, to $498,100. Again, the fewer home sales in British Columbia and Ontario will drag the average price down. Fewer sales in these two areas means there will likely be fewer high-end home sales in Vancouver and Toronto.
Though the national average home price is expected to drop slightly, you can expect prices to increase in Eastern Ontario, Quebec, New Brunswick, Nova Scotia, and Prince Edward Island. Alberta should remain relatively unchanged and prices will drop in Saskatchewan and Newfoundland and Labrador where supply is high relative demand.
In 2019, the CREA forecasts home sales to rebound to 496,500 units on a national level, which is still below the record highs in 2015, 2016, and 2017. The average home price for 2019 will increase by 3.1% to $513,300.
In Ontario, the average price forecast for 2019 is $594,900, which would be a 3.2% increase compared to the $576,200 average prediction for 2018. As usual, Ontario home sales will make up the majority of sales in Canada in 2019 with a forecast of 208,600 units. This would be a 6.8% increase compared to the 2018 forecast of 195,300.