Central 1 Credit Union\u2019s new Ontario Housing Forecast 2019\u20132021<\/a>, the median price of a Toronto home will reach $652,178, up just 3 percent from 2018.<\/p>\nCanada\u2019s central bank sets 2 percent as its target for inflation, so if that policy goal is met it would mean Toronto home prices would virtually be flat on a year-over-year basis.<\/p>\n
Prospects are grimmer for the next two years, with anticipated gains of 2.5 percent and 2 percent forecast for 2020 and 2021, respectively.<\/p>\n
The performance is broadly in line with cooler market conditions prevailing across the province.<\/p>\n
\u201cWith an increased number of buyers trying to bid down prices, fewer sellers are willing to sell or even list their homes,\u201d writes Edgard Navarrete, a regional economist for Central 1.<\/p>\n
By the year\u2019s end, Central 1 suggests 118,000 residential properties will change hands throughout the Toronto region this year, an increase of 5.9 percent versus 2018, when sales plunged 15.9 percent on a year-over-year basis.<\/p>\n
However, the pace of activity will slacken if the Central 1 forecast proves correct. Sales are expected to climb 3 percent in 2020 and 2.9 percent in 2021.<\/p>\n
\u201cDespite population growth being supportive of housing demand, Ontario\u2019s homeownership markets will post modest numbers in 2019 to 2021,\u201d he writes.<\/p>\n
In the report, Navarrete provides a few reasons for the modest forecast.<\/p>\n
\u201cThe sluggish economy and restrictive lending rules will affect the quantity, type and value of homes consumers will be able to purchase,\u201d he explains.<\/p>\n
Since January 2018, those hoping to take out an uninsured mortgage have been faced with a mortgage stress test that requires them to qualify at a rate that is either 200 basis points above their contract rate or the Bank of Canada\u2019s benchmark rate, whichever is higher.<\/p>\n
Previously, these homebuyers would have been able to sidestep a stress test as similar rules were limited to the insured mortgage segment, targeting borrowers who couldn\u2019t cobble together downpayments of 20 percent or more.<\/p>\n
\u201cRestrictive mortgage lending rules and increased economic uncertainty, due to external pressures, will weigh on Ontarians\u2019 shoulders in 2019 and beyond affecting many areas of the economy,\u201d says Navarrete, who cites international trade negotiations as one pressure on the provincial economy.<\/p>\n
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