Healthy Housing Market Forecast For 2021

Current trends and the outlook for housing market fundamentals suggest activity will remain relatively healthy through 2021, says the Canadian Real Estate Association (CREA). Economic activity continues to improve slowly following the initial stages of the pandemic. Over the past several years, record levels of international immigration, low interest rates, and an increasing share of Millennials entering their home buying years have helped make the housing market a significant source of strength for the Canadian economy. The recent government support programs for individuals and businesses have also helped the overall economy through the most severe parts of the pandemic to date. Mortgage interest rates have declined to record lows in 2020, including the Bank of Canada's benchmark five-year rate used by Canada's largest banks to qualify applicants under the B-20 mortgage stress test. With the Bank of Canada committing to keep interest rates low into 2023, mortgage interest rates are expected to remain near current levels through 2021. However, while sales activity rebounded to record-high levels, new listings only recovered to about their five-year average in most markets. The relative strength of demand for homes compared with supply has meant sales activity has been eroding active inventory, which was already scarce in many markets pre-pandemic. That said, this has been a trend since 2015. Despite the historic setback to the spring market caused by the pandemic, CREA projects national sales to hit a record of 544,413 units in 2020, representing an 11.1 per cent increase from 2019 levels.