10 Real Estate Market Trends for Residential Homes

Real estate, especially in the housing sector, is thriving. Research shows that housing activities remain strong and that resale of the housing markets continues to grow due to population and employment growth in Canada.

The banks are not expecting to raise their interest rates, which means mortgage interest rates will decline or remain stagnant. The Government of Canada is planning to launch its first-time homebuyer incentive, which will make it easier for people to buy their first home.

Signs for the housing marketing in Canada in the near future looks favourable, at least in most provinces and especially in Ontario, which is an opportunity to consider if you are looking to buy a new home. Housing activities faced a decline in the past years, but are expected to recover in recent years.

Here are the top ten real estate market trends, according to The Canadian Real Estate Association and other real estate firms:

Trend #1: Interest rates shrink

This real estate market trend is good news for buyers, as lower interest rates will reduce the stress test challenge of qualifying for a mortgage. This means that homeowners can enjoy a discounted fixed mortgage rate. Low-interest rates will also encourage renters to pursue homeownership.

Homebuyers can also consider bigger detached homes than smaller apartments and condominiums. This trend was apparent in 2019 and will continue in the future. With this real estate market trend, homebuyers will have access to home purchase financing.

Trend #2: Home sales gain momentum

Home sales surge will continue to grow in major markets. With lower interest rates and a more relaxed stress test, buying a home is possible even in major Canadian provinces such as Ontario and Alberta. This trend will continue well into the next decade, and you can expect to find many Toronto and Calgary homes available for sale.

Forecasts by the Canadian Real Estate Association indicate that housing activities will improve in 2020, even with prices continuing to rise across Canada. There is a turnaround expected in the year 2020 as home sales fell in 2017 and 2018.

Trend #3: New home building will stabilize

New home buildings will not be a priority in 2020 and will stabilize during the year. Home construction hit its peak after ten years in 2017 and since has been declining. This trend is likely to impact the prices of existing homes or resale of homes.

Trend #4: Home price rise and slow demand

Despite the drop in interest rates, home prices are expected to increase by about 6% in 2020. This real estate market trend will not impact demand drastically, but may slow the demand for home investments. However, the rise in disposable income will likely see steady demand.

Trend #5: Household income will grow

Household income plays a huge role in whether a Canadian can own their home. The strength in disposable income will increase contributions to strong demographic-driven demand for housing. The increase in household disposable income will also fuel home sales and will support the price increase in homes.

Trend #6: Stress test criteria revisited

Many government authorities are promising to make home-buying more affordable. The stress test will be revisited and tweaked to allow for more flexibility to qualify keen home buyers. This move will ensure buyers are not burdened by the mortgage stress test that was influencing their ability to purchase a home in the past few years.

Trend #7: A great opportunity for sellers

Home sellers can capitalize on the increase in home value. Sellers can expect to sell their homes within 4 or 5 months at most, which is the lowest level since 2007. With the stress tests being revisited and made more relaxed, homeowners can confidently and competitively put their homes for sale. This is also a great market for real estate agents, increasing their earnings and the flexibility of their real estate commission advances.

Trend #8: Qualifying for a mortgage gets easier

Homebuyers can be optimistic as the stress test will be revamped, and the interest rates stagnant or lowered, making it easy to buy and own their homes. This will increase the confidence level of home buyers and get them started in searching for their dream home.

Trend #9: Lack of supply

Supply issues account for a modest share of rising prices but are not the main factor. Lack of supply through the new home building will make the market for home purchases tight. However, demand will not change.

To the buyer, the concern is that prices will continue to increase, and therefore, it is better to buy now than later in the future. According to the Globe and Mail, the price increase of homes has to do with foreign buyers and purchases of multiple properties.

Trend #10: Increased consumer confidence

Lower mortgage interest rates, increased disposable income and a relaxed stress test, will increase consumer confidence. This will be one of the key factors affecting the housing market in the year 2020. More Canadians are likely to consider a home purchase during the year of 2020.

This trend will ultimately lead to more healthy and sustainable growth in the housing real estate sector. Furthermore, there will be a major shift in demand from condominiums to detached houses.