Real Estate 2020. What to expect
South western Ontario is set to experience a strong housing market in 2020. Lower unemployment rates, economic growth, and improved overall affordability in Guelph, Kitchener Waterloo and Cambridge are expected to drive the market forward. Here’s what to expect from the real estate market in the coming year;
A seller’s Market
After approximately two years of softer sales following the introduction of the federal mortgage stress test, the demand for homes started to noticeably increase in the second half of 2019. Many buyers who pulled out of the market because of the new mortgage stress test were lured back by low interest rates.
You can expect this trend to continue well into 2020. In its most recently revised forecast, the Canadian Real Estate Association expects the number of sales to increase 6.2% from 2018, and then climb to an increase of 8.9% next year. The estimated average sale price increase for 2020 is forecasted as roughly seven per cent for Guelph, KW & Cambridge.
If you’re planning to purchase a home in 2020, you will face a challenging market. A Low inventory of homes for sale at the beginning of the year and growing demand set the stage for bidding wars and a sharp rise in home values over the year. Should undersupply persist, prices could skyrocket as in 2016.
Mortgage Rates Will Remain Low
The Bank of Canada has kept mortgage interest rates relatively low and stable for the entirety of 2019 and as a result, banks and credit unions were able to keep their variable mortgage and line of credit products competitively priced. Because of this, borrowers have had access to some of the lowest mortgage rates on record. This is likely to persist throughout the new year, according to the BoC and that is good news for Buyers!
It Could Get Easier to Qualify
Recently a letter from Prime Minister Justin Trudeau indicated Federal Finance Minister Bill Morneau will take a second look at the controversial stress test’s criteria, and potentially make changes to allow for more flexibility when qualifying borrowers. While details have yet to be released, this could include lowering the qualifying rate or making it more dynamic based on individual borrowers’ profiles.
I expect the 2020 real estate market to get off to a fast start in the early part of the year with the investor market and then build as we get closer to spring. I advise buyers to start early and not wait until spring to start looking for homes because by then the competition should be fierce. Because of low inventory, sellers can expect to attract a lot of attention with properties in all market segments. Good luck! It’s going to be an interesting year!
Dean Manton is your real estate expert with over 20 years experience helping buyers and sellers in Guelph, KW, Cambridge and surrounding areas. Put Dean’s experience and market knowledge to work for you!
