Sales to decline in 2019

What will happen to the Canadian housing market in 2019 is really anyone’s guess. There are many unknowns about the general state of the economy, the federal election and whether interest rates will continue to rise. Any one of these factors, and several others, could have positive or negative impacts on the housing market. That said, one area of the market that is showing an element of predictability is sales. From past behaviours, current trends and city comparisons, there does seem to enough information to estimate sales volumes for Toronto and Vancouver in 2019.

If you follow our site, you will be familiar with our analysis on the Toronto market trailing Vancouver by nine months. Naturally, this nine-month horizon gives us plenty of forward looking information on how Toronto will perform in 2019; however, it does not provide any real assistance with respect to forecasting for Vancouver. For that, we are limited to judging from past performances, other shared predictions and current trends.

TO d sales 2019Source: TREB, Six Housing Sense

The Toronto detached forecast stems from it matching the behaviour of Vancouver, but nine months later. In Vancouver, detached sales peaked in June of 2016, one month before the end of the 30% price surge and continued to fall year over year for 13 months. Sales totals then rebounded for six months before crashing throughout the rest of 2018. Toronto has followed the first two steps of this path to date perfectly. Sales peaked in March 2017, two months before the price peak before falling for just over a year. In June 2018, sales picked up for five months before once again trailing year over year by November. This leaves Toronto to match the severe drop in sales Vancouver is currently experiencing to repeat all three steps. For this reason, our prediction is for Toronto detached sales to fall by 15-25% in 2019 to roughly 6,000 to 6,500 total sales. This estimate would place 2019 total detached sales at roughly half of the 2016 total, which would be in keeping with Vancouver’s 2018 total in relation to its 2015 peak sales.

TO condo sales 2019Source: TREB, Six Housing Sense

Despite the strong price growth achieved by Toronto condos while the detached market has struggled, condo sales have also been steadily dropping from the peak sales totals achieved in 2016. Just as the detached market has done, it also has close ties to Vancouver’s condo market with a nine-month time lag. Following Toronto’s trend heading into 2019 and leveraging Vancouver’s condo performance from 2018, our prediction is another drop in sales for Toronto condos. Our forecast is for a 10-20% decrease from 2018 numbers, to put total sales below 2014 levels. This would strongly match the sales volumes achieved in Vancouver this year and carry forward the downward sales trends Toronto appears to be on.

Van d sales 2019Source: REBGV, Six Housing Sense

Our forecasts for the detached and condo markets of Vancouver are similar. Given the slightly stronger start to 2018 in comparison to 2017, we anticipate lower sales for both sectors to start the year. This should balance out by spring and sales volumes achieved for the remainder of 2018 will likely be closely replicated in 2019. This forecast does not veer much from other predictions we have seen, though not many others are projecting a slower start to 2019 than 2018 had.

van condo sales 2019Source: REBGV, Six Housing Sense

The unknown to our forecast is what impact the continued lower sales will have on prices and inventory levels. This is where the two cities differ the most. Vancouver has ample inventory, where as Toronto’s is limited, especially in the condo sector. If inventory levels remain where they are, Vancouver prices will continue to struggle while Toronto’s will likely remain constant. That said, if low sales start to increase inventory in Toronto as well, downward pressure will start to build on prices.

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