The real estate industry is predicting a banner year as it looks into its crystal ball for 2020.

Given the doldrums the market showed over the last two years, this news may come as a bit of a surprise.  But who doesn’t enjoy a surprise especially when it’s tied to good news.  Housing industry insiders say this turnaround in the market means sales are anticipated to grow this year. This good news, however, is tempered with cautionary predictions that housing inventory will continue to affect the shape of the market in that supply issues will put pressure on prices.

The Canadian Real Estate Association (CREA) is forecasting “solid” house pricing gains in 2020 thanks in large part to the weak start in home sales that took place at the beginning of 2019. The turnaround that took place in real estate in the second half of 2019 is credited to a fall in new listings, a trend that CREA says will persist into 2020.

“These trends have caused many housing markets to tighten,” said CREA in its year-end quarterly forecast, “which has sharply lowered the national number of months of inventory. This is resulting in increased competition among buyers for listings and providing fertile ground for price gains.”

The Canada Mortgage and Housing Corporation (CMHC) is calling for a recovery of the housing market this year with an expectation that out-of-control pricing in Toronto and Vancouver markets will settle.

According to the Toronto Star, the national housing agency suggests a rebound in Toronto house prices in the next two years by as much as five per cent. That would put the average home between $765,300 and $898,400. It forecasts that prices could average $949,400 by the end of 2021, which is a 10.5 per cent hike over 2019 prices.

Increased consumer confidence will drive gains in 2020, which according to leading Canadian real estate franchises are pegged at a house price appreciation of 3.2 per cent and 3.7 per cent, respectively.

According to Canada Mortgage Trends, the Bank of Canada is expected to cut the lending rate in 2020 and deliver a 25-basis points rate cut. An RBC economist wrote that the cut should come in the second quarter of the year, however, continued strength in the housing market could translate to inaction on the Bank of Canada’s side. The mortgage information blog went on to say that some experts expect a cut in mortgage rates by July.

Sources: Canada Mortgage Trends, CREA, CHMC, RE/MAX, Toronto Star