According to CMHC, interest rates will likely sink lower in 2020 as the housing market continues to gather steam through the first half of the year. There’s also speculation on whether the NDP will play a bigger role in setting the housing policy agenda within the new minority government. The NDP it may be recalled had made housing a major part of their platform.
Now the Canada Mortgage and Housing Corporation (CMHC) has released what amounts to the most comprehensive 2020 outlook for the national market available up to this point.
CMHC is predicting will impact the market most over the next year and into 2021:
Canadian home sales will gain momentum over 2020 and 2021
After peaking in 2016, home sales took a dive in 2017 and continued to fall in 2018. If CMHC’s home sales forecast is accurate — likely, considering there are only a couple months left in the year — it will be more of the same in 2019. But there’s a turnaround on the horizon, with sales surges expected to continue in Ontario and B.C.’s major markets. The CMHC attributes this anticipated strength to disposable income increases for the two provinces that exceed the national average and strong demographic-driven demand for housing.
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.
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.
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 expected to remain 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.