Canadian Housing Outlook for 2020

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The Canadian housing market is expected to stabilize in 2019, particularly in Vancouver and Toronto, as we move into 2020. Healthy price increases are expected this year, with estimating a 3.7 per-cent increase in the average residential sale price.

Increased consumer confidence could be a key factor affecting the housing market in 2020. Most individual markets surveyed across Canada experienced moderate price increases year-over-year from 2018 to 2019. However, some regions in Ontario continue to experience higher-than-normal gains, including London (+10.7%), Windsor (+11%), Ottawa (+11.7%) and Niagara (+12.9%).

As more Canadians have adjusted to the mortgage stress test and older Millennials move into their peak earning years, it is anticipated that they will drive the market in 2020, particularly single Millennials and young couples. A recent Leger survey conducted by leading real estate franchises found that more than half (51%) of Canadians are considering buying a property in the next five years, especially those under the age of 45.

ONTARIO

Toronto is set to experience a strong housing market in 2020. Lower unemployment rates, economic growth and improved overall affordability in the Greater Toronto Area are expected to drive the market forward. The estimated average sale price increase for 2020 is six%, two points higher than the growth experienced between 2018 ($736,256) and 2019 ($766,236). The city saw 76,413 properties sold in 2019, up 12% from 2018 (68,064). While Toronto is experiencing its “busiest” construction season ever, the housing supply still falls short of the demands of the city’s rapidly growing population.

Cities such as Ottawa and Windsor are seller’s markets, showing substantial increases in average residential sale price at 11.7 and 11%, respectively. This strong growth is expected to continue into 2020, with Ottawa’s new LRT system impacting surrounding development and Windsor’s continued affordability attracting young professionals to the area. Buyers are also not burdened by the mortgage stress test, as they were in 2018.

The Niagara region is also showing strong growth, with average residential sale price increasing almost 13%, from $378,517 in 2018 to $427,487.50 in 2019. Value-conscious consumers from the Greater Toronto Area are buying in droves, with many choosing to live in the region while commuting to Toronto.

Southern Ontario is witnessing some incredibly strong price appreciation, with many regions still seeing double-digit gains. Thanks to the region’s resilient economy, staggering population growth and relentless development, the 2020 market looks very optimistic.

BRITISH COLUMBIA

Reduced foreign buyer activity has opened up more opportunities for local buyers in Greater Vancouver’s condo market. While average residential sale prices for all properties increased by two%, from $1,030,829 in 2017 to $1,049,362 in 2018, the number of sales dropped by 30%. The low absorption rate is expected to bring down average residential sale prices in 2019 by three%

Similarly, the number of sales year-over-year has dropped by 33% in Kelowna. Rising interest rates, government policy changes, and the mortgage stress test were all factors that contributed to the decline, which is expected to continue into 2019. Average residential sale prices increased by six% year-over-year from $674,930 in 2017 to $718,915 in 2018, with prices expected to decrease by three% in 2019.

The drop in sales in key markets across British Columbia can be partially attributed to Canadians’ increasing difficulty in getting an affordable mortgage in the region. The situation created by the introduction of the mortgage stress test this year, as well as continually increasing interest rates, means more Canadians will be priced out of the market.

THE PRAIRIES

Alberta continues to experience slowing economic conditions, which have contributed to a decrease in average residential sale prices in Calgary, from $478,088 in 2018 to $460,532 in 2019. Condos are the easiest way for first-time homebuyers to get into the market, with starter units going for as low as $150,000. While the city’s unemployment rate continues to remain high compared to the rest of Canada, the population is increasing, with more people moving to the city from other parts of the province.

On the other hand, Winnipeg has shown a small increase in the average residential sale price, both for freehold and condominium properties, by 1.5 and 0.8%, respectively. The number of properties sold also increased by 5%, from 8,139 in 2018 to 8,539 in 2019. Immigration to the city, in combination with reasonable prices and ample supply of inventory, is expected to drive sales going into 2020. Regina also saw the number of properties sold increased by more than 5% year-over-year, despite being one of the few markets where the effects of the mortgage stress test are still being felt.

ATLANTIC CANADA

In Atlantic Canada, Halifax and Saint John have experienced a solid price appreciation of six and five%, respectively. Affordability continues to attract many buyers in the region, most of whom are buying single-family homes. At the same time, the region’s multi-family and condo market is being driven by retirees. Conversely, the real estate market in St. John’s is expected to recover in 2020, with increased consumer confidence expected to bring about stabilization. However, the city’s aging population and high rate of outbound migration is expected to have an impact on housing market activity at some point.

Market watch - Strong Recovery in Sales Activity in 2019

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We certainly saw a recovery in sales activity in 2019 in many areas around the country, particularly in the second half of the year. As anticipated, many home buyers who were initially on the sidelines moved back into the market place starting in the spring. Buyer confidence was buoyed by a strong regional economy and declining contract mortgage rates over the course of the year.

Ontario - Strong recovery in Sales Activity in 2019

Toronto, 07 January 2020 -- Toronto Real Estate Board President Michael Collins reported that December 2019 residential sales reported through TREB's MLS® System by Greater Toronto Area REALTORS® were up by 17.4% year-over-year to 4,399. Total sales for the calendar year 2019 amounted to 87,825 – up by 12.6% compared to the decade low 78,015 sales reported in 2018. On an annual basis, 2019 sales were in line with the median annual sales result for the past decade.

"We certainly saw a recovery in sales activity in 2019, particularly in the second half of the year. As anticipated, many home buyers who were initially on the sidelines moved back into the market place starting in the spring. Buyer confidence was buoyed by a strong regional economy and declining contract mortgage rates over the course of the year," said Mr. Collins.

While sales were up in 2019, the number of new listings entered into TREB's MLS® System was down by 2.4% year-over-year. For the past decade, annual new listings have been largely in a holding pattern between 150,000 and 160,000, despite the upward trend in home prices over the same period.

"Over the last ten years, TREB has been drawing attention to the housing supply issue in the GTA. Increasingly, policymakers, research groups of varying scope and other interested parties have acknowledged that the lack of a diverse supply of ownership and rental housing continues to hamper housing affordability in the GTA. Taking 2019 as an example, we experienced a strong sales increase up against a decline in supply. Tighter market conditions translated into accelerating price growth. Expect further acceleration in 2020 if there is no relief on the supply front," said Jason Mercer, TREB's Chief Market Analyst.

The MLS® Home Price Index Composite Benchmark was up by 7.3% on a year-over-year basis in December 2019. From June 2019 onward, the annual growth rate in the MLS® HPI Composite Benchmark accelerated. The average selling price in December 2019 was $837,788 – up almost 12% year-over-year. For the calendar year 2019, the average selling price was $819,319 – up by 4% compared to $787,856 in 2018.

Ottawa - Record-Breaking 2019 Closes Out Decade

Ottawa, January 6, 2020 -- Members of the Ottawa Real Estate Board (OREB) sold 761 residential properties in December through the Board’s Multiple Listing Service® System, compared with 660 in December 2018, an increase of 15.3%. December’s sales included 534 in the residential property class, up 13.9% from a year ago, and 227 in the condominium property class, an increase of 18.8% from December 2018. The five-year average for December unit sales is 720.

“December’s statistics reflect the same story we’ve seen all year – historically low supply yet higher unit sales than in previous years. Days on market continued to decline, especially in certain pockets of the city, as properties that came on the market were snapped up by prepared buyers,” states Dwight Delahunt, Ottawa Real Estate Board’s 2019 President. “Unit sales in the condominium class consistently led the way, offering lower price point options for homebuyers that simply weren’t available in the residential category,” he adds.

The total number of residential and condo units sold throughout 2019 was 18,622, compared with 17,467 in 2018, an increase of 6.6%. Residential property class sales went up by 4.7% with 14,038 properties exchanging hands last year compared to 13,411 in 2018. Condominium property class sales increased by 13% with 4,584 units sold in 2019 versus 4,056 in the previous year.

“2019 was a record-breaker in both the number of sales as well as average prices, with the residential property class reaching $500K in several months during the year. This price growth is warranted due to the fundamental economic principle of supply and demand playing out, with limited supply putting upward pressure on prices. However, even with these increases, Ottawa’s real estate market continues to remain one of the most affordable and sustainable in the country,” Delahunt stresses.

December’s average sale price for a condominium-class property was $310,675, an increase of 11.5% from a year ago while the average sale price of a residential-class property was $500,306, an increase of 10.3% from December 2018. Year-end figures show an average sale price of $486,590 for residential-class properties in 2019, an 8.9% increase from 2018 and $304,203 for condominium properties, up 9.3% from last year.*

OREB’s 2020 President, Deborah Burgoyne, forecasts Ottawa will continue to experience limited supply and reasonably increasing average prices this year. “Supply issues will surely persist into 2020, and I don’t expect the inventory will be able to recover in the near future,” she suggests.

“Builders do seem keen on constructing luxury rental units, which is something we haven’t seen much of before. These could potentially add inventory to the residential class, as boomers will have decent options if they are considering entering a different lifestyle than homeownership. However, even if supply increases, high demand has shifted market values upwards in various neighbourhoods and prices are unlikely to go back down – this is our new reality,” concludes Burgoyne.

Alberta - MLS® Sales and Listings Up to Close Out 2019

Edmonton, January 3, 2020 -- Total residential unit sales in the Edmonton Census Metropolitan Area (CMA) real estate market for December 2019 increased 9.88% compared to December 2018’s 769 sales and decreased 23.25% from November 2019. The number of new residential listings is up, increasing 5.87% from December 2018. Overall inventory in the Edmonton CMA fell 10.83% from December of last year.

For the month of December, single-family home unit sales are up 9.80%, and condo unit sales increased by 3.21% from the same period of time last year.

All residential average prices are down slightly at $353,657, a 2.29% decrease from December 2018, and are down 0.05% from November 2019. Single-family homes sold for an average of $411,317, a 4.08% year-over-year decrease from December 2018, and a 2.22% decrease from November 2019. Condominiums sold for an average of $226,943, a 7.93% increase year-over-year, prices are similar to the previous month, down 0.51%. Duplex prices dropped 5.73% from December 2018, selling at $325,068, which was a 0.85% increase from the previous month.

“The Edmonton market prices remained stable this month while we saw an increase in year-over-year residential listings and sales,” says REALTORS® Association of Edmonton Chair Jennifer Lucas. “There have been about 75 more sales than we had in December of last year, and single-family home pricing decreased 4.08%, duplexes are down 5.73%, and condos are up 7.93% year-over-year.”

Single-family homes averaged 64 days on the market, a five-day decrease from last year. Condos saw no changes at 77 days on the market while duplexes averaged 75 days on market, a one day decrease from December 2018. Overall, all residential listings averaged 69 days on market, a 4.17% decrease year-over-year, and did not change from the previous month.

British Columbia - Housing Markets Flat in 2019 After Strong Second Half

Vancouver, January 13, 2020 -- The British Columbia Real Estate Association (BCREA) reports that a total of 77,331 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in 2019, a decline of 1.5% from the 78,516 units sold in 2018. The annual average MLS® residential price in BC was $700,460, a decline of 1.6% from $711,564 recorded the previous year. Total sales dollar volume was $54.2 billion, a 3% decline from 2018.

“Housing markets across the province staged a strong recovery in the second half of 2019,” said BCREA Chief Economist Brendon Ogmundson. “This sets up 2020 to be a much more typical year than what markets have experienced recently.”

A total of 5,218 MLS® residential unit sales were recorded across the province in December, up 48.9% from December 2018. The average MLS® residential price in BC was $755,165, an increase of 8.7% from December 2018. Total sales dollar volume was $3.9 billion, a 61.8% increase year-over-year.

Total active residential listings were down 10.6% to 24,691 units in December. The total inventory of homes for sale has declined more than 10% on a year-over-year basis for two straight months.

Sales Dip in December, While Prices Continue to Escalate

There were 5,925 residential homes sold through the Multiple Listing System (MLS® System) of the Kitchener-Waterloo Association of REALTORS® in 2019, an increase of 1.6 per cent compared to 2018. Contrasted to past years, 2019’s annual sales were 2.3 per cent below the previous 5-year average, and 3 per cent above the previous 10-year average.  

On a monthly basis, sales dipped 9 percent compared to last year, with 244 home sales in the month of December.  

“Overall, it was a steadfast pace of home sales in 2019,” says Colleen Koehler, President of KWAR.  “When annual home sales in Kitchener-Waterloo hit near 6000 transactions, I consider it to be a strong real estate market.” 

Total residential sales in 2019 included 3,590 detached (up 5.9 per cent), and 648 condominium units (down 7.8 per cent) which includes any property regardless of style (i.e. semis, townhomes, apartment, detached etc.). Sales also included 421 semi-detached homes (down 0.7 per cent) and 1,266 freehold townhouses (down 3.7 per cent).    

The average sale price of all residential properties sold in 2019 increased 9.3 per cent to $527,718 compared to 2018. Detached homes sold for an average price of $614,743 an increase of 7.1 per cent compared to 2018. During this same period, the average sale price for an apartment style condominium was 332,409 for an increase of 9.6 per cent. Townhomes and semis sold for an average of $409,979 (up 10 per cent) and $439,844 (up 11 per cent) respectively.  

The median price of all residential properties sold last year increased 10.1 per cent to $490,000 and the median price of a detached home during the same period increased 8.6 per cent to $570,000. 

“In 2019, the lack of supply continued to be a hurdle for anyone who was trying to buy their first home, move-up from their current residence, or downsize. This ongoing state of the market caused further escalation of home prices in 2019. With interest rates expected to stay low in the year ahead combined with Waterloo region’s ongoing growth, I expect 2020 will see more price gains alongside a steady increase in sales,” says Koehler. 

The number of months of inventory averaged 1.5 throughout the year, hitting its highest point in May when there was 2.1 months of supply, and ending the year at 0.7 (3-4 months supply is historically normal for Waterloo region). The average days to sell in 2019 was 23 days, compared to 24 days in 2018 and a previous 10-year average of 38 days.   

Dollar volume of all residential real estate sold last year increased 10.9 per cent to $3.1 Billion compared with 2018.  

While the majority of residential MLS® System activity is properties for sale, REALTORS® are increasingly representing landlords and tenants. Last year 733 residential leases occurred through KWAR’s MLS® System, which is on par with last year and, 2.5 times as many as just four years ago.  


Historical Sales By Property Type  



Months Supply of Homes for Sale 




Historical Median Sales Price – By Property Type 



Historical Average Sales Price – By Property Type 



Historical Sales – By Price Range 



Average Days on Market

 

Home Office Tax Deductions

One of the great virtues of starting a home business is the tax breaks you can claim. However, claiming aggressive write-offs is a sure way to attract CRA auditors. In this article, we'll look at some of the more popular home business write-offs as well as some tips on how you can legitimately claim them.

1. Keep business records
If you wish to claim tax deductibles on your home office expenses, you must get into the record-keeping mindset. You need to establish a means of keeping track of the money that is coming in and the money that is going out. Being audited is not the end of the world. However, being audited and not having the records to back up your deductions can be a nightmare.

The more detailed your accounts are, the easier it will be to face an audit. Compiling your daily reports into a monthly tracking sheet will drastically shorten the time it takes you to get your taxes together, and it will have the added benefit of providing a snapshot of your business month-to-month.

2. Write-off your workspace
Writing off a home office can be particularly attractive if you have a line of work that can be neatly confined to a dedicated room. You can still write off part of a shared room, but in either case, the space is calculated as a percentage of the total house or apartment area. That percentage is applied to all the related costs, including utilities, insurance, rent or mortgage payments and so on.

3. Update your business equipment
Office furniture, software, computers and other equipment are all 100% deductible within the year that the cost is incurred - you don't need to depreciate. There is an upper limit and the purchases must be majority-usage (primarily used) and necessary or helpful for business.

4. Business phone and internet
If chatting with clients is a necessary part of your business, it may be worth getting a second phone line or a dedicated business cell phone, as both of these are 100% deductible. If you only converse with clients occasionally, you can still write off the costs by noting the dates, times and reasons for the calls and then circling the items on your regular phone bill to deduct at tax time.

You can also deduct part of the cost of your internet if you use it for business. There is no absolute percentage to use, but it will be difficult to write off more than 50% if other members of your family are using it for non-business purposes. Be reasonable and pick a defensible percentage that you won't regret in the case of an audit.

5. Entertainment expenses
You can wine and dine clients (preferably paying or likely to pay clients) and get a tax break. The tendency for business owners at all levels to abuse this write-off has scared many home business owners away from claiming it. However, it is acceptable for you to take out a client for a meal and some entertainment. It will be easier to defend a $200 deduction for a client who has brought you a lot of business than the same meal for a buddy who paid you $20 for an hour's work over the entire fiscal year.

6. Take a trip, not a vacation
Have to hit the road to expand your market? Save your receipts. On business trips, your travel expenses are 100% deductible and your food expenses can be deducted at 50% of the total. Keep all of your receipts because even things like dry cleaning and tips are considered a necessary expense when you're out pounding the pavement in new markets.

7. Automobile expenses
When it comes to automobile expenses, you can claim registration, repairs, oil changes and gas. But it’s important you keep a log of the kilometres you are travelling for business on a daily basis, because you may need to prove how frequently you use your car for business.

8. Employ (not just pay) your family
You can use family members as employees and deduct their salaries as long as you account for their work and pay the going rate. If you have a business that lends itself to having a spouse and kids help out, then use that labour pool. You'll likely pay less than market rates for the help, and you can deduct insurance premiums for them as well.

9. Make justifiable deductions
Just because you have a home business doesn't mean you can go crazy with deductions. If you don't think you can face down an auditor with detailed proofs justifying the deduction, then perhaps it isn't a deduction you should be taking.

The CRA's T2125 form — Statement of Business or Professional Activities — needs to be filled out to claim these expenses. Page 3 of this form deals with the calculation of what is called business-use-of-home expenses.

Most tax software programs will let taxpayers claim home office expenses, although you may want to upgrade to a more expensive version that caters to the self-employed or small-business owners.

Working from home can result in big tax savings. But the rules are strict and the paperwork can be formidable. It might be wise for first-time claimants to seek the help of a professional.

How To Cancel A Credit Card Without Damaging Your Credit Score

The decision to cancel a credit card may be based on the desire to avoid excessive spending or if the terms of the card, such as annual fees or a high-interest rate, are no longer attractive.

While credit cards aren’t evil, they can be very dangerous. You need to be careful with the way you wield credit. If you’re not careful, you could do some real damage to your credit standing.

Be aware that cancelling a credit card may actually hurt your credit score. Part of your score is based on how much of your available credit you actually use; this is your credit utilization ratio. When you close a card, this ratio jumps because you’re using more of your valuable credit. And when this ratio jumps, your credit score goes down. (Also note that the longer you’ve had an account, the more you’ll affect your credit score by closing it.)

On the other hand, Too many open lines of credit can damage your account as well, which is why you should open new credit card accounts judiciously. Getting a 10% discount on your first purchase is probably no longer a good enough reason to open a new line of credit. Once you have at least one major credit card, you're not necessarily better off by opening a handful of store credit cards.

Cancelling a credit card is easy, but if you do it, do it right.

• Close just one account at a time, even if you’re closing several. First, cancel cards that charge you fees. Also, it’s better to cancel new cards before old ones. And you may want to keep cards with good rewards programs.
• Before you close an account, pay off your balance or transfer it elsewhere. If you try to cancel a card while it still has a balance on it, you might end up paying nasty fees and high-interest rates.
• Contact your credit card company. You can cancel some accounts online, which is convenient because often when you try to cancel by phone, the sales rep will do his best to talk you into staying. If this happens, be firm.
• Send written confirmation. Follow up by writing a letter to the card issuer.
• Watch your credit report. It may take several weeks for changes to appear on your credit report. It’s your responsibility to be sure the report is accurate, so keep tabs on it. You may also want to watch your credit score to see if cancelling the card did any damage.
• When you’re certain the account is closed, cut up your card.

There are many compelling arguments for closing credit card accounts. Doing so keeps you from abusing credit, reduces the risk of identity theft, and makes bookkeeping easier. Whether these factors outweigh the potential damage to your credit score is a call only you can make. The important thing is managing finances responsibly.