With 2018 in its final month, market observers are already looking ahead to 2019 to set projections for how the next year will go. Many estimates to date seem to be forecasting a slightly better than inflationary increase to prices for 2019, even if sales may continue to suffer. These projections make headlines but they never seem to be heavily securitized or credited 12 months later for whether they were right or wrong.
In 2016 TREB launched its Market Year in Review & Outlook Report. For the average reader this is shared through a news release where they forecast the volume of sales they anticipate for the year, as well as the average price. This three-year-old report does not provide us with the largest sample size of TREB estimates to score against; however, it does provide some numbers to judge TREB’s ability to forecast the market they oversee. 2018 is not entirely in the books yet, but with only December to go we will still be able to see with relative accuracy how the forecast held up.
As previously mentioned, TREB has shared their outlook for the total sales and average price in each of the last three years. Their forecasts are provided below:
|Year||Predicted Sales||Predicted Average Price||Actual Sales||Actual Average Price|
|2016||96,500 – 105,000||$655,000 – $665,000||113,040||$729,837|
|2017||104,500 – 115,500(110,000)||$800,000 – $850,000($825,000)||92,263||$822,572|
|2018||85,000 – 95,000(90,000)||$800,000 – $850,000($825,000)||73,677*||$789,217*|
Source: TREB – *As of November
Comparing their forecast to actuals for 2016 and 2017 we see a mixed record. In 2016 TREB did not have enough confidence in the market, as sales and prices soared beyond their expectations. In 2017 the year started with a bang with increased sales and wildly increasing prices, only to completely fall from grace in both categories for the rest of the year. The up and down year created a situation where TREB was short on their sales forecast but almost spot on with prices.
|Year||Sales Forecast vs. Actuals||Price Forecast vs. Actual|
Source TREB – *Forecasting 4,500 sales for December
TREB showed more restraint in their sales prediction and held their price forecast steady for this past year. Unfortunately, even with their reduced sales estimate, actual sales throughout the year will once again miss the mark. Prices are up marginally over the end of last year, though not in the low 800s like TREB had hoped.
So, in the three-year history of TREB’s outlook estimates they have been under once and are trending to be over twice. We will see their fourth projection in just a few short weeks and watch how it holds up as the year takes shape.
In our next post we will revisit the economic impact of fewer sales, as the spin offs of a strong real estate market are immense, and the city and region are taking an economic hit from the reduced activity.