![\"Canada's](\"https:\/\/www.zolo.ca\/blog\/wp-content\/uploads\/2018\/11\/img-replace-424x294.jpg\")
<\/figure>\n\n\n\nThe extreme highs and lows that marked the last decade of housing activity are now a distant memory as we head into 2020. Instead, we can expect steady sales activity and an acceleration of housing prices through the course of the year.<\/p>\n\n\n\n
The biggest drivers are the persistently low mortgage rates and the continued demand from first-time buyers (including immigrants and landed residents).<\/p>\n\n\n\n
As a result, the housing market will heat up in the spring, as buyers compete for the limited housing inventory and lenders drop their mortgage rates to compete for borrowers\u2019 business.<\/p>\n\n\n\n
Last year, the best rates available on a five-year fixed-rate mortgage were between 2.7% and 3.5%. The lower the rates mean Canadian buyers can afford about 10% more on the purchase price of their home. As rates rise, this purchase price begins to fall (in order for the buyer to qualify under the federal mortgage stress tests).<\/p>\n\n\n\n
Homebuyers Win With Great Rates<\/h2>\n\n\n\n
For buyers, it gets better.<\/p>\n\n\n\n
In the last few years, there\u2019s been rising competition in the online mortgage space. While the entire borrowing process is far from being 100% online and automated, more and more buyers are choosing to go online to obtain pre-approval (and in some cases, pre-qualification) of a mortgage rate. As a result, many online lenders are doubling-down in their effort to attract direct-to-consumer mortgage business. Even the big banks are getting in on this activity.<\/p>\n\n\n\n
Last year, the Bank of Nova Scotia started their push for online mortgage business by going against the norm and advertising their best mortgage rates online. (Typically, lenders advertise posted rates and buyers need to go through a pre-approval process to find out the best available rate.) Now, most are expecting the remaining big banks to update and relaunch better, more enhanced mortgage websites with at least a few set to offer highly competitive rates.<\/p>\n\n\n\n
Going into 2020, buyers who opt to shop online for a mortgage rate can expect increased competition among lenders, which will translate into rate battles aimed at winning buyer business \u2014 and exceptionally good rates for those willing to let their fingers do the work.<\/p>\n\n\n\n
Sales Activity Will Continue to Grow<\/h2>\n\n\n\n
While debates continue on whether or not the federally-mandated mortgage stress tests should be more dynamic \u2014 allowing those provinces and cities negatively impacted an opportunity to readjust the policy \u2014 the fact remains that most Canadians have adjusted to the mortgage stress test.<\/p>\n\n\n\n
For example, in B.C., the number of housing transactions dropped precipitously after January 1, 2018, when the recent mortgage stress test (for uninsured mortgages) took effect. At its lowest, the sales activity in 2018 was almost a near match to the sales activity in 2010, just after the U.S. housing market crash.<\/p>\n\n\n\n But after a year of adjustment, the number of transactions started to pick up and by the end of 2019, sales activity had rebounded with no apparent reason why it should stop. This, coupled with persistent low-interest rates, an increase in immigrants looking to secure roots, and more millennials moving into better earning years, and most analysts believe that buying activity isn\u2019t likely to drop as we move through 2020.<\/p>\n\n\n\n Most analysts now agree: While 2018 was a challenging year, this last year was a chance for the market to stabilize and regroup and all indications suggest that 2020 will continue in this vein.<\/p>\n\n\n\n The biggest problem going into this new year is lack of supply.<\/p>\n\n\n\n According to the Canadian Real Estate Association (CREA), the late 2019 turnaround in the market was driven largely new listings. Prior to the fall, limited listings set a trend for limited sales activity.<\/p>\n\n\n\n In a statement released late in 2019, CREA noted: “These trends have caused many housing markets to tighten, which has sharply lowered the national number of months of inventory.” In November 2019, this measure fell to its lowest level since mid-2007. \u201cThis is resulting in increased competition among buyers for listings and providing fertile ground for price gains.\u201d<\/p>\n\n\n\n Supply issues are expected to continue into 2020, meaning buyers may face bidding wars for the most desirable property types and neighbourhoods, even in markets that have stabilized.<\/p>\n\n\n\n Despite the lack of affordability and the ever-present predictions of a real estate bubble bursting, housing continues to be a solid investment option for Canadians.<\/p>\n\n\n\n The big reason is that housing continues to offer returns that are much higher than other fixed-income investment products, such as bonds or GICs. Then, when you add in the tax-advantage of a primary residence, and, for most Canadians, purchasing property even at less-than-affordable rates, begins to make financial sense.<\/p>\n\n\n\n To illustrate, let\u2019s use the CREA\u2019s latest data. According to CREA, the average national house price increased by 8.4% from November 2018 to November 2019.<\/p>\n\n\n\n Based on this, if a homebuyer purchased a home in November 2018 for the national average price of $487,554; then 12 months later, that same home would be worth $528,728 \u2014 or a price increase of $41,174.<\/p>\n\n\n\n That\u2019s astounding, particularly in an investment climate where high-interest savings accounts and locked-in guaranteed investment certificates (GICs) offer a return around 2% to 3%.<\/p>\n\n\n\n But what makes property even more attractive for the average Canadian is the tax advantage that comes with owning a principal residence.<\/p>\n\n\n\n If that buyer ended up having to sell after a year of owning and living in the home (and assuming that the buyer had no other property and that the home truly was a principal residence and not a business endeavour), then that 8.4% return on their investment would be 100% tax-free.<\/p>\n\n\n\n Now, here\u2019s the kicker, CREA is predicting a 6.2% increase in the average national price of a home in 2020. Once again, a return that\u2019s far superior than what other fixed-income products are offering in the current marketplace.<\/p>\n\n\n\n Of course, the actual rate of return is completely dependent on a variety of factors, such as where and what you buy. Homebuyers in Alberta, for instance, experienced an average decline in prices by 1.2%, while homebuyers in Ontario, experienced an average price increase of 9.5%.<\/p>\n\n\n\n What can buyers and sellers expect as we move into 2020? According to CREA, the \u201cevidence suggests housing activity will continue to improve into 2020, with prices either continuing to rise or accelerating in many parts of Canada.\u201d<\/p>\n\n\n\n In particular, employment in all areas outside of the Prairies and Newfoundland & Labrador remains strong, the nation\u2019s population is expected to grow which puts increased demand on the need for housing, and the Bank of Canada is not expected to raise interest rates, at least for the first half of 2020. All of this supports CREA\u2019s assertion that sales activity will be strong throughout Canada’s housing market in 2020.<\/p>\n\n\n\n Yet, as we all know, Canada\u2019s housing market is not a monolithic entity. It\u2019s a highly regionalized economic factor that pulls in a variety of stakeholders. As such, each region, and indeed each city and neighbourhood, will need to consider how the 2020 market will impact them.<\/p>\n\n\n\n According to a report released by B.C.<\/a> credit union, Central 1<\/a>, the province\u2019s housing market is recovering much quicker than anticipated. The biggest reason is improved affordability \u2014 affordability that was created by a soft-landing market correction that seems to have stopped and stabilized towards the end of 2019.<\/p>\n\n\n\n Combine this new \u2018affordability\u2019 with the ongoing buyer demand and the still historically low mortgage rates and throw in some incentives (such as first-time buyer programs) and the province is poised to see a rise in sales activity and prices going into 2020. \u00ad\u00ad<\/p>\n\n\n\n \u201cA growing number of buyers in the [Lower Mainland] region have idled on the sidelines waiting for improvements in affordability following mortgage stress tests. Significant price declines over the past year and lower borrowing costs have buyers returning to the market among all housing types, particularly in the lower-priced condominium sector,\u201d writes report authors.<\/p>\n\n\n\n As a result, Central 1 is predicting a 3.9% increase in the median house price in the Lower Mainland.<\/p>\n\n\n\n Specifically, the median price for Vancouver<\/a> CMA is expected to rise by 3.6% in 2020, although other areas in B.C. are not predicted to do as well. For instance, the median price for Abbotsford<\/a> CMA is expected to drop almost 1% in 2020; the median price for Victoria<\/a> CMA is expected to match inflation, at 2%, while the median price for Kelowna<\/a> CMA will rise 0.8% in 2020.<\/p>\n\n\n\n Perhaps the hardest-hit provinces, when it comes to the mortgage stress test, were Alberta and Saskatchewan. Hit by resource sector price fluctuations, as well as trade and tariff headwinds, these provincial economies struggled over the last few years \u2014 and 2019 was no exception.<\/p>\n\n\n\n In Alberta<\/a>, the two largest cities, Calgary<\/a> and Edmonton<\/a>, continue to struggle. According to CREA, the national price of a home in Calgary declined 2.3% between November 2018 and November 2019. Edmonton wasn\u2019t much better, with an average property price decline of 1.8%.<\/p>\n\n\n\n The good news is that condos in this province are some of the cheapest and easiest ways for first-time buyers to get into the property market. Starter units are selling for as little as $150,000, which makes it an affordable option for first-time buyers and for investors with a strong appetite for potential ups and downs.<\/p>\n\n\n\n Saskatchewan<\/a> also experienced national house price declines of 1.1%, but that masks how hard Regina<\/a> was hit in the soft-landing market correction that started in 2018 and appears to have ended in 2019. This city\u2019s national housing price declined by 5.5% between November 2018 to November 2019.<\/p>\n\n\n\n Going forward, both provinces will need to see stronger employment and continued rise in population growth \u2014 two strong indicators that there is work and people ready to do the work.<\/p>\n\n\n\n One bright spot in the Prairies was Winnipeg<\/a>, MB. The overall provincial price increase was a more than respectable 3.8% increase, but Winnipeg clocked a 5.5% increase in its average property price between November 2018 and November 2019. It appears the overbuilding fears that existed for this city have been quashed as inventory was snapped up over the last 24 months. This is due, in part, to increased immigration to the city partly because property prices are still reasonable and partly because employment is steady and predictable.<\/p>\n\n\n\n While there may have been doubts in August 2019, there is no doubt as the 2020 year starts: Greater Toronto<\/a> is set to experience a strong housing market in 2020.<\/p>\n\n\n\n The area boasts lower unemployment rates, excellent economic growth and increased demand from ageing millennials and new immigrants.<\/p>\n\n\n\n Ontario<\/a> ended the year with a 9.5% increase in the average house price. Surprisingly, much of that growth did not come from the Greater Toronto area \u2014 which experienced a 6.8% price increase by the end of 2019 \u2014 but from surrounding municipalities, such as London<\/a> & St. Thomas (+10.7%), Kitchener<\/a>-Waterloo (+17.8%), and Kingston<\/a> (+11.5%).<\/p>\n\n\n\n Still, the prediction is that the Greater Toronto Area will see an estimate average price increase of 6% in 2020.<\/p>\n\n\n\n The biggest reason for the continued price hikes is that the GTA suffers from a serious lack of supply when it comes to housing. While there is plenty of construction going on in Toronto, the new builds can\u2019t seem to meet the ongoing need and demand of buyers in the region.<\/p>\n\n\n\n When you move outside of the GTA, we find that many markets still favour the seller. For instance, Ottawa<\/a> and Windsor<\/a> showed substantial increases in their average home prices (11.7% and 11%, respectively) and sales activity and, subsequently, price growth isn\u2019t expected to dwindle in 2020.<\/p>\n\n\n\n The Atlantic provinces offer some of the most affordable housing prices in the nation, but finding employment is a sticking point. The good news is that most cities in the Atlantic provinces appear to have diversified away from resource sector employment and into tech-inspired industries. According to a report by TechImpact, tech industries contributed $6.1 billion to Atlantic Canada\u2019s economy in 2017 (up from $5.2 billion in 2014). Recent reports show that the biggest impediment to the area\u2019s tech-growth is a lack of qualified labour \u2014 a situation that has drawn the attention of provincial and municipal governments as they attempt to close the gap and increase their economic output.<\/p>\n\n\n\n The overall result, however, is a more robust, and predictable, economy that attracts many buyers to the region. And it shows in the overall housing numbers.<\/p>\n\n\n\n At the end of 2019, New Brunswick<\/a>\u2019s average housing price increased 4.8%; PEI<\/a>\u2019s average housing price increased 8.7%; Newfoundland<\/a> & Labrador\u2019s average housing price increased 6.6% and, Nova Scotia<\/a> defied estimates with an annual price increase of 18.7%.<\/p>\n\n\n\n The region\u2019s multi-family and condo market are being driven by retirees, eager to cash out on the built-up equity in their home. This helps first-time buyers, particularly those that are ready and poised to start a family, to get into the market at affordable prices.<\/p>\n","protected":false},"excerpt":{"rendered":" The good news is that next year is looking up for Canada\u2019s housing market with competitive mortgage rates, increased buyer demand, first-time buyer incentives and rising population and employment rate<\/p>\n","protected":false},"author":3,"featured_media":17393,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"guide":[],"class_list":["post-12236","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news-trends"],"acf":[],"zolo_excerpt":"","_links":{"self":[{"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/posts\/12236","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/comments?post=12236"}],"version-history":[{"count":8,"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/posts\/12236\/revisions"}],"predecessor-version":[{"id":21815,"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/posts\/12236\/revisions\/21815"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/media\/17393"}],"wp:attachment":[{"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/media?parent=12236"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/categories?post=12236"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/tags?post=12236"},{"taxonomy":"guide","embeddable":true,"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/guide?post=12236"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"BC](\"https:\/\/www.zolo.ca\/blog\/wp-content\/uploads\/2020\/01\/BC-what-to-expect-housing-market-2020-zolo.png\")
Lack of Supply Is the Real Problem<\/h2>\n\n\n\n
Housing Still an Excellent Place to Park Your Money<\/h2>\n\n\n\n
Big Markets, Like Greater Vancouver, Offer Opportunity<\/h2>\n\n\n\n
![\"Canada](\"https:\/\/www.zolo.ca\/blog\/wp-content\/uploads\/2020\/01\/Canada-housing-market-2020.png\")
British Columbia and Greater Vancouver<\/h3>\n\n\n\n
The Prairies<\/h3>\n\n\n\n
Ontario and Greater Toronto<\/h3>\n\n\n\n
Atlantic Canada<\/h3>\n\n\n\n