CANADIAN HOUSING MARKET TRENDS TO LOOK OUT FOR IN 2020
1. After national declines in 2019, home prices will begin marching upward again
Like home sales, Canadian home price growth has taken a hit over the last two years. That said, the decline in prices was not as pronounced and the bounce back is expected to play out quicker than what’s anticipated on the sales front. Unlike home sales, the CMHC believes it will be strength in Ontario and Quebec that leads to elevated growth through 2020. But by the time 2021 rolls around, the B.C. market will be playing in the big leagues again and knocking Quebec into third place for price growth. For the CMHC, it’s really a tale of three provinces driving home prices upward while only “modest gains” are expected for other regions.
2. The Toronto and Montreal housing markets will outperform in 2020
Low mortgage rates, strong labour markets, population growth, rising foreign investment and the diminishing impact of government market-cooling policies are among the top reasons that Canada’s two biggest cities appear primed to rise to the top of the heap for housing market performance in 2020.
Montreal’s housing market has been on a dominant run and, while 2020 may not be as hot as 2019, it is still set to be a banner year for the city. Consistent monthly home sale and price increases have been the default setting over the past several years and the market continues to grapple with declining home listings, making the long-relatively affordable market a little bit tougher for homebuyers as of late.
3. New home building won’t gain strength, but it will stabilize
Canadian home building hit a 10-year high in 2017 but has declined sharply since then. The CMHC says the total number of homes that started construction in 2019 is about the same ballpark total we should expect for both 2020 and 2021, which is in line with the historical average for annual home construction. The economic outlook for Canada is positive over the next couple of years and that generally leads to builders feeling good about picking up the pace of home construction. However, the CMHC believes household formation will slow during that same period, meaning the strong labour market and income increases that come with it won’t positively impact the homebuilding picture as much as one might expect.