Demand for Toronto homes is surging and the region’s real estate board is fretting over whether new listings will be able to keep up with buyer desire to purchase this year.
In its 2020 outlook released earlier this week, the Toronto Region Real Estate Board (TRREB) projected that home sales would jump by over 10 percent annually, with demand for lower priced options like semi-detached, townhomes and condominiums staying strong.
Housing Market News Alerts
Sign up now for news alerts on the Canadian housing market
While many in the real estate business will likely be happy to see such an optimistic forecast, there’s a nagging concern affecting the market right now that threatens to push prices higher and potentially put a damper on sales in the long term.
“Unless we see a significant increase in supply, it is highly likely that new listings will not keep up with sales growth in 2020,” wrote TRREB in a press release that accompanied its 2020 outlook.
“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.”
The impact will be felt in both the resale and rental markets across the Toronto region as supply challenges affect both homebuyers and renters. With a robust labour market and population growth keeping demand high, TRREB cautioned that rental prices that outpace inflation should be anticipated through the year.
But when it comes to the resale market, it’s all about the lack of supply.
“The key issue, however, will be the persistent shortage of listings. Without relief on the housing supply front, the pace of price growth will continue to ramp up. Policy makers need to understand that demand side initiatives on their own will only have a temporary impact on the market,” said TRREB Chief Market Analyst Jason Mercer.
TRREB, which partners with Ipsos to survey homebuyer sentiment, noted that affordability was a top concern for GTA residents during the recent federal election. With prices yet again marching upward with increasing velocity, it appears affordability may deteriorate further, rather than improve. The primary critique from TRREB and other real estate industry voices is that all levels of government should do more to focus on supply-side solutions to the affordability challenges facing the region, rather than the primarily demand-side measures that have been introduced thus far.
“During the recent federal election campaign, Ipsos identified affordability issues as being top of mind for Canadians, and central to those concerns are housing costs in Canada and the GTA in particular,” said Ipsos Vice President Sean Simpson.
“In the coming year, governments will no doubt be focused on how their policies are impacting the delicate balance between housing supply and demand, and how they can best provide relief to Canadians’ pocketbooks in the area of housing costs.”