CMHC Summer Market Outlook Forecast - Predications of Toronto Market to Recover by 2021 through 2022
Thursday Jul 02nd, 2020Share
Learn how CMHC’s Summer Market Outlook applies to the Toronto Real Estate Market. New home construction, home sales and home prices are expected to all be back up in excellent health by 2022.
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This expands on CMHC's Spring Market Outlook.
CMHC forecasts a decline in 2020 for new homes built. Sales are down by ~81% compared to last year. 866 new homes sold about one month ago, the lowest level of new construction home sales Toronto has seen in the last 20 years.
Disruptions in supply chain due to closures at the borders and global lockdowns have slowed down construction. We’re ~6 months behind expectations.
Canadian employment is down 15% (Stats Canada). The decline with employment and income has lowered demand for housing.
Market activity mimics Spring 2017. Pre-construction home sales were strong last year with more than 80% of units sold. The additional inventory will help with the speed of Toronto’s recovery compared to the rest of Ontario. There are currently 54,000 condominium units under construction in Toronto, which will eventually add to overall supply.
Immigration and foreign buyers play a huge role in making an active market. Home sales in the GTA will drop before the end of 2020, start to recover by Q1 2021 with steady growth throughout 2022.
Early 2021 might see a temporary drop in market activity due to slower winter market activity.
“Short-term job losses will occur primarily in the retail and hospitality industries, which typically employ lower paid workers. Based on their average income level, these groups are more likely to rent than own.”
The homeownership market won’t be as severely impacted compared to the rental market. Home prices and sales volumes both trending up, and home inventory has been steadily rising over the past 10 weeks.
“Average house prices… will decline throughout the remainder of this year and into 2021.”
This is going to be a result of inventory rising at an increasing rate for various reasons. More inventory means more choices for home buyers, which should help balance out home prices before they begin rise too quickly.
There's a combined average of 770 new freehold and condo listings per week, a number that exceeds the combined average we saw earlier this year. This average dropped to about 240 early on during the pandemic.
Housing inventory is also going to rise throughout the year as some homeowners might be forced to sell as mortgage deferral options and federal stimulus packages both begin to run out in the Fall. Some landlords across the province were in a position where they had tenants who were no longer paying rent.
A key driver on Toronto’s rental market is immigration, which has seen a reduction due to border and airport closures. The younger generation and students completing post-secondary studies might elect to stay at home with their parents a bit longer during a difficult job market.
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Weekly Market Reports • https://www.youtube.com/playlist?list=PLVt1mFxDHaHrlc6X2p4MJ_d8MTQ91yRTm
Pre-Construction Condos - Everything You Need to Know • https://www.youtube.com/playlist?list=PLVt1mFxDHaHp5MIXX5mhfpHDA_h4yhUp_
VIDEO - CMHC Spring Market Outlook • https://youtu.be/fSc0UxotPXY
Spring Report • https://www.cmhc-schl.gc.ca/en/housing-observer-online/2020-housing-observer/2020-housing-market-outlook-special-edition
Summer Report • https://www.cmhc-schl.gc.ca/en/housing-observer-online/2020-housing-observer/overview-summer-2020-housing-market-outlook-report ————
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Disclaimers: At the time of production, Fred Tam is a Real Estate Salesperson with Right at Home Realty Inc., Brokerage in Toronto, ON. Fred’s videos do not necessarily represent the views and/or opinions of RAH. The purpose of Fred’s videos are to educate you and help you make sense of the real estate process. If you have questions about home loans, real estate, taxes, finances, real estate law, insurance, professional trades, or any other services where you live, you are advised to reach out to the appropriate professional for further counsel about your own unique situation.