Expected Sales Growth for 2020
TRREB president Michael Collins recently revealed that there will be a price growth and a very strong year-over-year sales. This is according to the forecast contained in the TRREB’s newly released Market Year in Review and Outlook Report. Greater Toronto Area REALTORS announced 7,256 housing transactions through Toronto Regional Real Estate Board’s MLS System in February 2020. This represented a 45.6% growth compared to a 10-year sales decline in February 2019. Compared to the 2017 record result, February 2020 sales are still down. GTA’s year-over-year sales growth recorded strong results for ground-oriented home types. February 2020 sales exhibited positive momentum after early seasonal adjustment. The results were up by 14.8 % compared to January 2020. The sales growth is expected to be better this year. Toronto Regional Real Estate Board’s forecast presented in its Market Year in Review and Outlook Report projects 97,000 sales growth in 2020. However, Mr. Collins affirms that the annual pace of sales growth realized in February may not continue throughout the year. According to him, it will be like making comparisons to much stronger sales results recorded after the first quarter of 2019. February 2020 listings amounted to 10,613, which is a 7.9% growth compared to February 2019. The new listing annual growth rate was much lower compared to that for sales. This demonstrates clearly that the market conditions got much tighter over the past year.
According to TRREB CEO John DiMichele, sales growth above listings growth is becoming the norm. This has been brought about by temporary effects experienced in the 2017 Ontario Fair Housing Plan and the changes to the OSFI mortgage stress test. It is worth noting that when these procedures were running their course, the much-publicized housing supply challenges in the GTA remained unabated. All levels of government have confirmed the housing supply problem. TREBB CEO insists that the board needs to move quickly from policy briefs to shovels in the ground. If the market conditions continue to tighten, competition between buyers will keep on increasing. This will result in an additional acceleration in year-over-year price growth. The MLS Home Price Index Composite Benchmark has increased by 10.2%, while the average price for all kinds of homes combined has increased by 16.7%. The double-digit average price increase has been felt in most major market segments, including condominium apartments and detached houses. According to TRREB’s chief market analyst, the current average price prediction is for 10% price growth in 2020. This viewpoint signifies a very fast growth, however, there is a possibility of further tightening in the detached market segment, which could thrust the overall normal selling price above TRREB’s benchmark scenario. This will soon take place if sales growth will continue to surpass new listing growth as has been witnessed in 2020.
A simple way to gauge whether local housing market situations favor sellers or buyers is to consider the duration and degree to which market balance readings are higher or lower than their long-term averages. Comparing the sales-to-new listings ratio to the long-term average shows that about two-thirds of the whole local markets were in balanced market territory.