So Where Are Prices Headed?

It is clear that the number of sales and new listings are significantly down since the state of Emergency was declared in March. Prices however, have remained relatively stable and makes us question where are they headed? This article from Toronto Storeys summarizes 17 different forecasts on the Toronto and Canadian housing market for the coming year. The spread between these forecasts is absolutely astonishing! Some predict a 7.8% year over year increase in the average sale price, others a minor 1-3% increase or decrease, and some a -14% nose dive. So what is happening and why the huge difference between them?

The first thing to remember is that all of these models and predictions rely on a number of assumptions. Some of which are flimsy at best because the our healthcare and economic outlook changes on a weekly and sometimes daily basis. Also remember that some of these writers and forecasters are pretty set in their views. There are definitely the 'forever bulls' who extol that real estate prices can only go upwards and appreciate while the 'chicken littles' on the other side are always claiming that the bubble is about to burst and that the sky is falling. I tend to skew away from a very bull or bear view on the housing market and land somewhere in the middle.

This pandemic has had a devastating impact on the economy and we are dealing with something that has never happened before. But individuals and families still need to buy and sell houses and if levels of supply and demand continue to drop proportionately to one another, prices will remain relatively stable. In the downtown core and specific neighbourhoods we are already seeing bidding wars and pre-emptive offers making a return appearance. And while we aren't seeing the frenzied pace that we saw in January and February of this year, houses and condo's that are priced well and properly marketed are selling quickly.