As the final days of 2017 approach, 2018 real estate market forecasts are beginning to appear. Last week, Royal LePage, CREA (Canadian Real Estate Association) and RE/MAX, all provided their predictions as to what the 2018 real estate market will look like.
According to Royal LePage CEO Phil Soper, the first half of 2018 will remain slow as buyers adjust to the new mortgage rules. A natural supply of demand forces will ultimately triumph as home prices in Canada will increase by 5%. Spearheading this growth will be the Greater Toronto Area, where he expects the average price to climb by 6.8%, the highest price increase of any major Canadian city in 2018. Driving this production will be the condominium sector, as buyers continue to look for more affordable entry-level properties.
Canada’s economy, growing housing demand from “peak” millennials (those who are over 25 today), plus increasing immigration and intra-provincial migration to Vancouver and Toronto are all creating a strong demand for housing in both of Canada’s priciest cities.
CREA (Canadian Real Estate Association)
The Canadian Real Estate Association expects home sales to tumble in 2018, pulling prices lower and creating a broader drag on economic growth for the country next year. CREA predicts that home sales will fall by 27,000 units or 5.3% in 2018 to 486,600 units. This drop-in sales will also lead to a 1.4% decline to the national housing price.
Provincially, CREA anticipates greater weakness to the Ontario real estate market in 2018. The volume of sales will fall by 10% in Ontario, on top of the already 9% decline that occurred in 2017 and this will lead to a 2.2% decline to the average housing price in the province. Contributing to the weak forecast is an expected reduction in sales of higher-priced homes in the Toronto area, as a result, this will reduce the overall average price.
There is positive momentum heading into the new year added CREA Chief Economist Gregory Klump, whether or not it continues beyond January 1, 2018, when the tougher mortgage rules take effect, remains to be seen.
RE/MAX is predicting that the Greater Toronto Area (GTA) is facing a flat year for home prices on average in 2018, although some downtown Toronto and suburban communities will see higher prices. RE/MAX sees no change to the overall home price in the GTA next year when compared to 2017. However, they do envision a 2.5% increase to home prices nationally.
Christopher Alexander, Regional Director for Ontario and Atlantic Canada at RE/MAX Integra, has indicated that pricing in the GTA will be uneven. With central Toronto and communities such as Brampton and Oakville likely to see price gains in 2018, communities north of the city in York Region like Markham, Unionville, Stouffville and Richmond Hill are likely to see a decline. These York Region communities have faced some of the biggest declines since the GTA housing market began a downturn in April and that pressure will likely continue into 2018.
Forecasting is a tool that helps individuals in their attempt to cope with the uncertainty of the future. Our team outlook for 2018 sees the continued normalization of the marketplace and we expect an active and busy market, with lots of homes trading hands. However, with tougher mortgage-qualification rules taking effect on January 1st, the market will be tentative during the first quarter of 2018. There will be ongoing pressure on prices, but once that has subsided we will see a consistent marketplace for the rest of 2018.
At the end of December 2018, we will revisit this blog and see who had the most accurate forecast. Right now, we believe that we are in a healthy marketplace, which is good news for the real estate industry.