Year in Review
The sky still hasn’t fallen has it? Despite the slower end to 2018, things picked back up as expected in 2019 and especially towards the end of the year. Sales were way up despite listings being at incredibly low levels (some of the lowest we’ve seen since 2007) and interest rates were coming down signalling that 2020 might have much of the same in store.
The Condo Market
Once again, without a doubt, the engine that drove the market last year was the condo market. This simply comes down to two things…affordability and convenience.
Buyers, especially first timers, are pouring everything into homes under $700K and are opting for the convenience of living in or near city centres with dedicated transit and amenities that deliver as much free time as possible.
The Freehold Market
Detached homes rose approximately 4% over the year with the average price coming in just under $1.1 million. However, it was the semi-detached and townhome market that saw huge gains at 11% and 16% respectively. Once again, it’s an affordability issue. Anything priced under $750K is gobbled up and has led to such huge gains compared to the detached market. People are buying as much home as they can afford and its showing at those two levels.
So, How Did We End 2019?
- Prices Are INCREASING
AGAIN…As noted above, anything under $750K is snatched up fast! Condos, towns and semis led price growth while detached homes above a million were moderately up (around 4%) which is still a good sign for those homeowners as prices had been relatively flat for awhile.
- Sales Are UP, Listings are Down
This is the important part of the equation. The year before there wasn’t a huge difference in the sales numbers but it spiked this year while listings are down even further. We never got that buyer’s market we were looking for and we’re fully entrenched in a seller’s market.
- Average Days on Market are DOWN & Inventory is DOWN
The months of inventory hit a staggering 1.6 months. That means that if no new listings were added to the market all existing inventory would be sold in about 6-8 weeks. How crazy is that?
3 Predictions for the 2020 Mississauga Real Estate Market
1) Prices will go up again…
When it comes to predicting pricing, it really is as simple as taking a look at supply vs demand. That term is overused, but it’s overused for a reason. We can certainly look into the factors of WHY there is so much demand vs so little supply but I covered that pretty effectively in my 2019 prediction post. However, here’s a quick recap:
The Liberals won the election and record rates of immigration will continue (though that would have been the case under any government that won) and there’s still a massive influx of companies, jobs and professionals making their way to the GTA. Combine that with boomers opting to stay in their homes to either renovate or use the equity in them to help their adult children get into the market and younger people staying in homes longer (the move up dream is taking longer to fulfill) and you see listings hitting record low levels.
There is a very real squeeze on supply and an unprecedented amount of people and money flowing into this market. It only makes sense that pricing will increase and nothing about that equation has changed going into 2020.
I expect prices to increase at similar levels to last year across all markets – likely in the 8%-10% range for anything “affordable”. A modest increase at the detached level again (up to 5% tops) is likely in my opinion.
2) There will be a new program announced for first time buyers
The government has tried a couple of times to help first-timers around the country in previous years, but nothing that’s really moved the needle in any real way especially for those in the GTA. I believe the federal government will announce a more impactful program to help first timers in regards to the biggest issue with purchasing right now – the downpayment. I believe this will happen because even at “entry-level” pricing first-time homebuyers are feeling the squeeze and I believe many have accepted a life of renting at this point. Immigration can fill some of that gap but it’s still important for young Canadians to be able to feel like they can afford a home and start a family and I think the government will be keenly aware of that this year once again.
3) Interest rates will be cut further
Despite everyone thinking that mortgage rates would rise in 2019, the Bank of Canada did the unexpected and cut rates again. We’re back to a few years ago now with incredibly low rates available. I believe another cut will come this year and we will finish 2020 with a lower 5-year fixed rate than now.
With continued uncertainty in the world markets, and a US election coming up, I think the BoC is going to be very, very careful once again this year.
The Wrap Up
2019 went about as expected and I think we’re in line for much of the same the 2020 Mississauga real estate market. Despite record high condo prices, I believe that market will continue to surge – especially on the pre-construction side. And anything deemed “affordable” in the freehold market will sell and sell quickly as long as the home is in good shape and is properly marketed.
Good luck hunting, selling or investing in 2020 and remember real estate is a long game…
Photo credit to – Christian Schnettelker – www.manoftaste.de