TOP CONSIDERATIONS FOR 2020:
- A new normal in the market: supply adjusting to slower sales activity, providing conditions that are more supportive to a stable price environment.
- Market improvements are expected to be driven by gains for lower priced product, while easing prices and oversupply persist in the upper price ranges.
- Supply adjustments are expected to continue, helping to eventually push the market toward balanced conditions.
- Prices are expected to stabilize over the year, but remain just slightly lower than last year’s annual levels.
- Stable mortgage rates, previous price declines and job growth should support modest improvements in sales, but these will remain at lower levels.
- Employment risk weighs on the market, which could result in further declines in sales and prices.
Sales activity in 2019 was slightly higher than forecasted, as stronger-than-expected price declines and easing mortgage rates helped support modest improvements for homes priced below $500,000. These improvements outweighed the losses for the higher-priced product.
As we move into 2020, we expect these trends in the market to continue – where improvements will be driven by the lower end of the market and challenges will persist in the higher end. Despite challenges in the higher end of the market, overall sales activity is expected to improve by two per cent.
Improving sales and easing inventories are expected to help reduce the oversupply. These reductions will help shift the market closer to balanced conditions, but the pace of adjustment is expected to be slow. The reductions in oversupply are expected to slow the pace of price declines, as prices are forecasted to ease by less than one per cent. Like 2019, divergent trends are expected to remain the theme of 2020. Relatively affordable product is expected to record some improvements, while persistent oversupply will weigh on the higher end of the market.
While the housing market is generally expected to move to more stable conditions, there is some downside risk to the forecast this year.
Much of this risk is coming from employment expectations. Full-time job growth did improve in 2019, but at the end of 2019, Calgary and many other areas of the province recorded job losses. Some growth is expected in 2020, but recent job losses could spill into the early part of 2020, impacting confidence, housing sales and prices in 2020.