REALTALK Speaker Series - 2019 Market Outlook
In February 2019, the Barrie and District Association of REALTORS (BDAR) hosted a REALTalk Market Outlook event. BDAR was joined by Gregory Klump, the Chief Economist at the Canadian Real Estate Association (CREA), Ted Tsiakopolous, the regional economist for the Canadian Mortgage and Housing Corporation (CMHC), and Paul McGowan, product manager at Teranet.
All speakers were asked to provide insight into current market conditions and predict how the market may respond to changing macroeconomic conditions. All three panelists emphasized that national macroeconomic conditions will remain fairly stable, job growth and unemployment should not change drastically, consumer confidence should remain fairly high, and increases in housing prices should be roughly indexed to inflation.
All three panelists noted, that real estate is highly localized. Specific features of the real estate market in Barrie and its proximity to Toronto make it a somewhat unique market that will diverge from national trends in several important ways.
The broad themes and comments made by each panelist can be found below.
Gregory Klump, Chief Economist of CREA
Barrie is a balanced market, meaning that demand and supply for housing are roughly similar. Importantly, Toronto is also currently a balanced market, meaning that there is an adequate supply of housing in Toronto given the demand, so there isn’t a lot of pressure to leave Toronto and seek homes in nearby communities, like Barrie.
Prospective home-buyers and current homeowners can expect increases in housing prices to be more closely indexed with inflation starting in 2020.
Importantly, economic growth is expected to slow across Canada, though Ontario, and the communities surrounding Toronto are not expected to slow as much, as most job growth will take place within these regions. Consumer confidence is also expected to remain high in Ontario.
In summary, national macroeconomic conditions are expected to worsen and might become recessionary through 2020, but Ontario will remain slightly insulated from these effects. Housing markets will remain stable, as Barrie and Toronto are both currently balanced markets. A potential slowdown in sales can mostly be attributed to a return to pre-2015 long-term averages.
Tim Tsiakopoulos, Canadian Mortgage and Housing Corporation
Ontario’s economy is in the mature phase of its economic cycle. Consumer spending and investment in residential housing have already begun to slow, as business investment and trade have also started to grow less quickly. Global manufacturing is retracting and bond-yields are lowering, which suggests that there will be a global slowdown in growth expected in early 2020.
Although the global economy and the Ontario economy are expected to slow through 2020, the Ontario housing market is still relatively strong and the chance of a price bust remains low, while a price correction remains possible. Tim also noted, a slower economy and housing market means that consumers have more time to make informed decisions about housing type, location, and mortgage options, meaning that consumers should generally be happier about their home-buying decisions.
Paul McGowan, Teranet
Paul noted, like Gregory, that Toronto and Barrie remain balanced markets so housing prices should remain stable in both cities and their surrounding communities. Consumers and real estate agents can expect low-to-moderate growth through 2019 and slower growth through 2020. The fundamentals of the housing market remain stable.
Paul noted that the housing market may change more drastically as millennials begin to purchase more homes. There is potential for significant changes to consumer preferences as millennials are looking to enter the housing market may be more satisfied or comfortable with condominiums and row housing as options.
- Global and national economic growth are expected to slow through 2020.
- Ontario will not be completely insulated from these broad trends but will experience less of their effects than the rest of Canada. Consumer confidence remains high in Ontario and the fundamentals of the housing market remain stable. Increases to housing prices can be expected to be closely indexed to inflation as demand returns to pre-2015 long-term averages.
- Barrie and Toronto are balanced markets which can both potentially expect small downward price corrections in 2020, but not any drastic changes or price busts.