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2180 Steeles Avenue West,
Suite 204, Concord,
ON, L4K 2Z5

Phone:     905-761-7001
Toll Free: 1855-761-7001
Fax:          905-761-7005

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16 January 2020

CREA predicts home prices growth in 2020

The latest report by the Canadian Real Estate Association (CREA) shows the national housing prices kept rebounding last month.

According to CREA, benchmark prices rose by 3.4% from December 2018 and reached $643,700 in the 19 markets CREA tracks. Meanwhile, the average home price went up by 9.6% annually to $517,000. (The benchmark price is more accurate as it excludes the most and least expensive properties.)

“The pace of home price gains went up closer to the end of 2019,” - noted Gregory Klump, CREA’s chief economist. “In case the recent results are just a beginning, the price tendencies in British Columbia, the GTA, Ottawa and Montreal may raise the national result in 2020, despite weak pricing environment among real estate markets in the Prairie region.”

This difference between Ontario and the Prairies has been there for more than a year. Ontario real estate shows growing prices, with excessive demand from Toronto already affecting small urban centres in the province. At the same time, prices for home in the Prairies have been declining for about 5 years.

Home sales fell slightly from November, but rose by 22.7% annually due to relatively weak sales in December 2018. Although the sales have recovered from the six-year low seen in February 2019, they’re still 7% lower than the peak of 2016 and 2017. High results are reported in the Lower Mainland of British Columbia, Calgary and Montreal, while Toronto and Ottawa show more restrained numbers.

CREA keeps blaming the mortgage stress test for not letting the market recover fully in terms of sales. However, stricter mortgage rules have to protect the entire economy, and make sure only those who can comfortably afford a property will buy it.

Hypothetically, pushing prospective buyers out of the market with the stress test should lead to prices decline. And yes, the prices for expensive detached houses grew much slower during the previous few years. Nevertheless, now the pace is going up, so although the demand was down slightly, the supply fell sharply.

Today, active listings are at a 12-year low level and there are only 4.2 months of inventory left, which is the lowest number since the summer of 2007 and still lower than the long-term average of 4.3 months. In other words, in case sellers don’t start massively listing their homes, potential buyers will probably face stronger competition, higher prices, pressure to remove conditions from their offers and no chances of the first or second choice of real estate.

So, unless the supply increases, housing prices will go up this year.

 

 

 

 

 

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