So 2019 is now behind us and we now embark on a new decade and a new year. I wanted to put this post together to discuss how are market performed in 2019 and what 2020 might bring to our real estate market. The last few years have been a roller coaster with the runnaway market of 2017 and the correction we saw in 2018. 2019 brought us a more balanced and moderate market.
As you can see from the charts below 2019 was a year of low supply and rising prices, and we finished the year of in December with a very strong month. I guess the question now is what will 2020 bring.
According to the Royal LePage 2020 Outlook, Canadian home prices are expected to see a healthy apprication by the end of 2020. This will be driven by low signle digit appreciation in both the condo and detached home segments.
With a decline in the high price appreciation in the condo market in recent years, refelcts and shift in millenial demand towards houses and is ecpected to boost the sales activity in the suburbs.
Expectations for 2020 see the Oakville market rising by 5% and the Hamilton & Burlington markets to grow approximately 3.8%
According to Royal LePAGE the demand will be driven by:
"The positive outlook for Canadian real estate in 2020 is based on healthy buyer demand. A segment of potential homeowners that once put home purchasing on hold beginning in January 2018, due to the introduction of the mortgage stress test, started returning to the market in the second half of 2019, driving competition and demand.
Another significant driver in demand is Canada’s healthy immigration rate. According to the Royal LePage Newcomer Survey released in October 2019, newcomers to Canada are expected to purchase one in every five homes on the market over the next five years. Newcomers have high consumer confidence in Canadian real estate (86%) and arrive with savings to put towards the purchase of a home (75%).
“Our 2020 national forecast is based on a continuation of healthy economic conditions,” said Phil Soper, president and CEO, Royal LePage. “Paradoxically, a slowdown in economic growth could cause us to revise the outlook upward. While one month does not a trend make, November’s surprisingly weak employment numbers may be the trigger that causes the Bank of Canada to join the U.S. Federal Reserve in lowering interest rates.
“Falling rates normally encourage new housing demand,” Soper continued. “This would mean further upward price pressure in regions where employment remains healthy, which is most of the country. That window to lower or flat home prices is closing or has closed for most Canadians.”
Peak millennials drive shift in demand from condominiums to houses
Most of Canada is seeing a shift in demand from condominiums to detached houses as peak millennials those between the ages of 26 and 32 and the largest cohort within the powerful millennial consumer demographic, seek houses to accommodate growing families. Comparing the national median price of a condominium at the end of 2019 with 2014, the price has increased 48 per cent. Now this demographic is looking for more space and a yard. The resulting demand will put upward price pressure on detached homes. However, condominiums will remain in demand in regions where affordability restricts choice of housing types.
“The oldest peak millennials are now in their thirties,” said Soper. “This huge wave of Canadian consumers has been transforming Canadian real estate for a decade, putting more focus and upward price pressure on our condominium housing stock. With kids in hand and dog on leash, these parents are now eyeing the suburbs that their baby boomer parents so coveted. We predict that the period of disproportionately higher price appreciation in the condo segment is drawing to a close as interest in detached homes is reborn.”
Regional appreciation drivers
The median price of a two-storey detached home in the Greater Toronto Area is expected to increase 4.5 per cent year-over-year in 2020, rising to $1,027,200, while the median price of a condominium is forecast to increase 6.0 per cent to $600,000. (source: RLP 2020 Outlook)
So I think that we are looking at a very healty real estate market for Oakville & surrounding areas. If you are looking to make a move in 2020 please feel free to contact me to discuss you situation. Click here to contact me today