Thursday Feb 13th, 2020
Market conditions tightened throughout 2019 and continued to do so in January 2020 as well. With little to no relief forecast on the listings front over the next year and demand expected to increase, it is difficult to forecast anything but further increases to average home prices for all major home types in 2020. The point forecast for the overall average selling price in 2020 is $900,000, close to a 10 per cent increase compared to the average of $819,319 reported for 2019. This forecast rate of growth presupposes that price growth will continue to be driven by the less expensive mid-density low-rise home types and condominium apartments. If the pace of detached home price growth starts to catch up to that of other major home types, the average selling price for all home types combined could push well past the $900,000 mark over the next year.
In an efficient housing market, the acceleration in price growth that was experienced in 2019 would prompt an increase in the number of new listings in 2020, as homeowners would list their homes for sale in order to take advantage of equity gains. However, generally speaking, home prices have been trending upward over the past decade, yet listings have flatlined. The latest Ipsos Home Owners survey found that 14 per cent of respondents indicated that they were very likely to list their home for sale in 2020.year.While this share was up relative to the previous year’s survey, the “very likely to list” share has hovered between 12 and 14 per cent over the last three years – both in the fall and spring surveys. In addition, even a flat listings trend relative to 2019 would represent a marked turn-around, because the seasonally adjusted annualized rate of new listings trended consistently downward in 2019, ending up at approximately 130,000 versus a range of 150,000 to 160,000 over the past decade. The bottom line is that new listings will not keep up with sales growth in 2020. The end result will be an acceleration in price growth over the next year, as an increasing number of home buyers compete for a pool of listings that could be the same size or smaller than in 2019.