Following a rocky 2018, Canada’s housing market showed signs of rebounding all through 2019, and it looks like a recent report has confirmed that sales and prices will be on the rise in 2020.
The Canada Mortgage and Housing Corporation released its 2020 Housing Market Outlook, predicting that next year will be slightly more active than this year.
The CMHC is expecting national housing starts to post up an annual decline for the second year in a row by the end of 2019, but starts should stabilize in 2020 and 2021. Detached starts peaked in 2017, while multi-unit starts peaked in 2018. This explains the slowdown in 2019.
"Housing starts are projected to stabilize in 2020 and 2021 at levels in line with long-run averages," says Bob Dugan, CMHC's Chief Economist. "This follows two years of declines from elevated levels in 2017. Resale activity and house prices are expected to fully recover from recent declines."
When it comes to existing home sales on a national level, the total for 2019 will be around 2018 levels (hovering above 400,000). It won’t be until 2021 that we see sales approaching the highs achieved in 2016. The CMHC credits the projected increase in home sales to rising household disposable income.
By the end of 2019, expect the average MLS price to drop for the second consecutive year, forecasted to range from $479,300 to $497,200. In 2017, the average MLS price hit a high of $511,830. The CMHC expects the average MLS price to hit/exceed the record high in 2020 and 2021. By the end of 2020, the CMHC believes the average MLS price could be as high as $531,000.
When it comes to vulnerabilities, the CMHC believes international trade tensions and high household indebtedness could impact national housing activity. There’s some good news for Toronto though as it appears that the risk of overvaluation is easing as pricing moderates and falls in line with economic fundamentals.