Predictions review and 2020 forecasts
2020 is done so it’s time for our annual predictions review. One year ago we made predictions about the market in 2019, and it’s time to see how clairvoyant or off the mark we were. It’s easy and common to make predictions, but much harder and rarer to critically review them later. The point is to get better at predictions, but also instil a sense of humility about market predictions, especially when it comes to pricing. Getting predictions right is hard, and even if you get them right it’s difficult to determine whether a correct prediction was due more to chance than prescience. As I’ve said many times, to make useful decisions about your own real estate investments you want to take the analytics and do your own risk assessment.
Predictions were based on the number of sales for the year, the median December price of single family homes and condos, as well as the Bank of Canada rate.
Predictions for sales ranged from a low of 5750 to a high of 9020 for the year. After a very sluggish start to 2019, sales picked up substantially in the latter half, ending up with 7254 to finish the year. That took the majority by surprise, since the consensus was for the market to remain slow for the year, and the average guess at 6976 came in less accurate than last year. The winner, perhaps benefiting from some beginners luck was Vic RE Newbie with their prediction of 7250 sales.
Now prices. The guess here was for the median price in December, and of course monthly medians are notoriously volatile, but it’s undeniable that the drifting downwards of prices that we saw earlier in the year stopped by around July and prices started slowly increasing again, to end the year roughly flat for both single family and condo. The winner on single family prices was Mt. Tolmie Foothills with their guess of $800,000 which was spot-on while Vic RE Newbie takes the prize for condo medians at $427,000.
Rates stayed steady for the entire year while most predicted a small bump from the Bank of Canada. However the mixed domestic economic signals throughout the year combined with the international trade unrest made the central bank sit back and wait it out rather than continuing their tightening path even though it was clear they wanted to reign in household borrowing. The drop in fixed lending rates also came as a big surprise in 2019. That combined with the fading shock of the stress test brought buyers back to the market in the last 6 months. Correct guesses for flat rates came from yvr-yyc-yyj, Caveat Emptor, and Gate.
My own estimates, which looked pretty good to me in July all came in too low as the rebound in the market surprised me as it did many others. Even the Vancouver market which looked truly abysmal in the spring came roaring back in late summer and fall. Seasonality hid most of the rebound in the market as sales still dropped as usual which means most people haven’t realized what is happening yet. Make no mistake the Vancouver market has improved massively in 6 months and Victoria has followed suit to some extent. The dropping assessments (that are now out) will lead to some excited headlines in the media in the next few days, but that is last year’s story and no longer reflects the current market.
Here are all the predictions made at the start of the year, sorted by accuracy of the guesses for sales and prices. User Gate takes first place with an average error of only 0.8% from the real numbers, while Vic RE Newbie and Mt. Tolmie Foothills get second and third. Congratulations to the winners who will take home the coveted warm fuzzy feelings for the year.
| User | Annual Sales | SFH Median | Condo Median | Accuracy (Error) | BoC Rate |
|---|---|---|---|---|---|
| Gate | 7200 | $790,000 | $425,000 | 00.8% | 1.75% |
| Vic RE Newbie | 7250 | $780,000 | $430,000 | 01.1% | 2.50% |
| Mt. Tolmie Foothills | 7400 | $800,000 | $400,000 | 02.8% | 2.00% |
| Michael | 7550 | $815,000 | $440,000 | 03.0% | 2.25% |
| gwac | 7428 | $825,000 | $452,000 | 03.8% | 2.25% |
| yvr-yyc-yyj | 7500 | $820,000 | $400,000 | 04.1% | 1.75% |
| inreallove | 6810 | $749,000 | $437,000 | 04.9% | 1.50% |
| DuranDuran | 6625 | $785,000 | $390,000 | 06.4% | 2.00% |
| plumwine | 6869 | $767,000 | $385,000 | 06.4% | 2.25% |
| The Underwriter | 6666 | $735,000 | $410,000 | 06.7% | 2.25% |
| Patrick | 7500 | $840,000 | $375,000 | 06.9% | 2.25% |
| Matthew | 6975 | $735,000 | $390,000 | 06.9% | 2.50% |
| Leo S | 6700 | $744,000 | $395,000 | 07.4% | 2.00% |
| Marko Juras | 6750 | $750,000 | $385,000 | 07.7% | 2.00% |
| Jamal McRae | 7000 | $750,000 | $370,000 | 07.7% | 2.50% |
| Caveat Emptor | 6596 | $735,000 | $380,000 | 09.4% | 1.75% |
| strangertimes | 6550 | $730,000 | $375,000 | 10.2% | 2.50% |
| Renter in Paradise | 6250 | $725,000 | $395,000 | 10.2% | 2.25% |
| Dasmo | 6100 | $760,000 | $380,000 | 10.6% | 2.00% |
| Robin | 5750 | $745,000 | $405,000 | 10.9% | 2.25% |
| LeoM | 6500 | $710,000 | $375,000 | 11.3% | 2.25% |
| Triple A Rated | 6250 | $695,000 | $355,000 | 14.6% | 2.00% |
| Penguin | 5900 | $710,000 | $365,000 | 14.8% | 2.00% |
| Ian | 8000 | $690,000 | $330,000 | 15.6% | 1.50% |
| Cadborosaurus | 8250 | $579,375 | $253,500 | 27.3% | 3.00% |
| Hawk | 9020 | $525,000 | $275,000 | 31.4% | 3.50% |
2020 Predictions
This year is quite murky in my view. On the bullish side:
- The job market remains strong
- Mortgage rates are low
- The Vancouver market has stabilized and remains much pricier than ours
- Sales have recovered from much of the stress test
- Inventory is low.
- The hot market was cut short by policy actions rather than allowing it to play out which means positive consumer sentiment is not yet exhausted.
On the bearish side:
- Prices haven’t declined appreciably from the peak
- Affordability for single family homes is still stretched.
- The down market is only about 2 years old when it usually lasts at least twice as long.
- The country’s boom cycle is long in the tooth and recent economic data is weaker.
- Household debt remains at record levels.
As I’ve said before I think we are in a longer cooling cycle but that refers to market conditions, not prices. Also, the mortgage stress test threw the market for a loop and these large real estate cycles are never smooth and will often run counter to the bigger trend for many months before proceeding along the path. The stress test disrupted the hot market, and put a halt to price increases for the time being. However that shock could splash back for a while as well and add demand instead of subtracting it, especially if the feds “tweak” (aka weaken) the stress test as the prime minister directed. Thus I think in 2020:
- Sales will hold approximately steady at the current higher level, which means sales in 2020 will increase by about 6% from 2019 to 7700
- Prices will be largely stable, however I believe single family will move slightly upward while condo remains flat due to increased inventory and reduced investor demand as dedicated rental units flood the market. December 2020 medians: $830,000 for single family, $425,000 for condos.
- Rates will remain flat. Although inflation may increase, unemployment data will be more mixed and the central bank will remain on the sidelines. Recession will probably hold off for another year.
What are your predictions for 2020 sales, Dec 2020 median prices, and Bank of Canada interest rates? Predictions will be tracked and revisited in 6 and 12 months so prepare to be either humbled or emboldened!
What else do you think will happen in housing and the economy this year?
New post: https://househuntvictoria.ca/2020/01/06/sales-are-up-across-the-board-except-luxury/
I mean, neither have yours, but who’s really keeping track.
You’re right, Patrick. Hawk did have the odd good line among his endless repetition of certain phrases such as “look out below!”, “lipstick on a pig,” and “bagholders.”
One of my favourites was his name for Andrew Wilkinson: “Wee Wilkie.”
Hawk said lots of things in arguing with the bulls, but a few lines were pure gold.
My favorite…
“If you would loosen your Ralph Klein underwear your brain may function in today’s world.” – Hawk
Sales: 7622
Single: $769,000
Condo: $400,000
Year end rate: 1.75
That, and his predictions never once panned out in three or four years of posting comments.
I suspect he realized he was a bit too invested in strident arguments with internet strangers and took a mental health break from the board. Good for him.
Rate (year end) 1.25
Sales 7500
SFH – 808,000
Condos – 388,000
I should predict tomorrow but I must ask.
Does realtor.ca in victoria not show any rentals? I see nothing here. In Toronto I remember moving years ago and it was a big thing, tons of people listed on there.
I’m predicting no change in the local housing market:
Sales: 7254
SFH: $800k
Condo: $427k
Rates: 1.75%
Lots of good stuff in this thread: https://twitter.com/PlanMaestro/status/1213884523185917952?s=20
I particularly like this one pertaining to interest rate forecasts.
2020:
Sales: 8080
SFH: $838k
Condo: 408k
Rates: 1.75
Just kidding introvert. This really is me.
This would be the return to normal phase of the vancouver melt down.
Just disappeared. Last post exactly one year ago, Jan 4, 2019.
This is for you Hawk, hope you’re doing well.
OK, let’s use 2016 census data, You don’t like my 82.6% “couple-households” ownership rate, and criticize it because it isn’t necessarily “families with children ” and its stascan but isn’t the census. But you don’t quote the census numbers, so I suppose I have to.
So here’s here is Ontario data from the 2016 census. It’s the first one I found, and feel free to update this with BC or Victoria data if you think it is materially different. Ontario’s rate of home ownership (69%) is very close to national average (68%) and its quite representative of Canada. And the info is well presented (see link)
As you can see, it confirms the 2011 NHS stascan data (82% ownership of families) and confirms they are using “families with children”, and yes it’s the census. In fact there’s even higher home ownership of families with children at 83%.
===/////
https://www.fin.gov.on.ca/en/economy/demographics/census/cenhi16-11.html
“Couple families with children were most likely to be owners, at 83.4 per cent”
“Less than half of non-family households (e.g., persons living alone or with friends) owned their dwelling in 2016 (49.7%).”
“Among homeowners, 72.0 per cent lived in single-detached houses, 7.0 per cent in apartments of at least 5 storeys, 20.6 per cent lived in other single-attached dwellings, and 0.4 per cent in movable structures.”
====//;;;
So I hope we can move on, and reflect on what it means for a huge 83% of families with children to be homeowners in Canada. I think it’s great. Definitely no housing crisis for families with children. Hard to expect that number getting much higher, since many families are on assistance etc. and not able to qualify. And there are “fussy” people like we’ve seen here, with families and children who could buy but choose to rent instead.
It also points out that only 7% of Homeowners live in apartments, countering your assertion that condo ownership materially skews the averages compared to 1947.
To me, it also points to a reason that millennial home ownership is lower than previous generations Look at those 2 numbers from 2016 census…
– 83% homeownership among families with children
– 50% homeownership among “non-families”
We are told that millennials are having later marriages, and less/later children than previous generations. That’s fine, but we should then expect that millennials will have lower home ownership rates, closer to the 50% “singles” rate than the 83% “families” rate. We don’t need to have the govt smoke foreigners out of their homes with high spec taxes to help millennials buy homes. Let’s just wait, and let them get married and have kids, and they’ll buy homes when they’re ready. They aren’t married with children yet, so likely many don’t need/want to own homes.
Number one prediction for the year is that my company stock options will finally pay out and I can retire. Also bears will continue to not buy and wish they had by the end of the year.
My quote that you responded to specifically said “SFH”, not “home”. For Statscan “home” means any dwelling. Also “couple” is not equal to”family”, it’s a subset thereof.
Given that WWII had ended just 2 years previously, I would not be too surprised. You and I were both talking about the whole postwar era, “1947-1960s” as you put it. The issue is how affordable it was to become an owner of an SFH during this era, versus how affordable it is to become an owner of an SFH today. Are you trying to support the argument that it was actually harder back then? My own memories, and those of others on this board, say that’s nonsense.
Also you are quoting the 2011 National Household Survey Data which is both obsolete and of questionable methodology (voluntary survey). I suggest the use of the 2016 census data.
Sales: 8100
SFH: $840k
Condo: $440k
Rates: flat
Whatever happened to hawk did he die? Or just quit the board, did he say goodbye?
I’ll be slightly more realistic this time and will dream less. I think with the condos under construction and the increases to insurance rates they’re going to take big hits this year. The magical SFH needs a smack down too but won’t fall as much as condos.
Sales 8100
Sfh $720,000
Condo $290,000
BoC 2%
https://www150.statcan.gc.ca/n1/daily-quotidien/171025/cg-c006-eng.htm
I think that home ownership rates for families back in 1947 were less than that (even when you factor out condos), but if you have data that says differently please post it.
There were no condos back then, which means virtually all singles and many couples without children rented. I think if you took a closer look you’d find that the ownership rate for SFH among families was higher than today.
That’s the conclusion you get when you don’t look at the facts behind the statistics. Being a boomer I’m well aware of what the norm was in the post-war years.
I would never want a house bigger than 1500 sq feet. So yeah, no issues there. Won’t tell you what my current house is because Introvert will get all snoopy about it and try to figure out my exact address.
But not as many owned as today. Home ownership rate is higher today than back in 1947-1960s so chances of him owning back then are less. And would the 1947 James be willing to accept the typical sized “sh*tbox” house (1100 sq ft, vs 2200 today), and the typical job (labourer vs “programmer”)?
A returning WWII veteran, I would think. Also the RE market had seen the longest period ever of weak demand and soft prices (since 1929). No student debt and discharge bonus from the military. Lots of good jobs for the asking. CMHC had just been created to help returning veterans buy. Every reason for that generation to buy a house, and so they did.
Easy to take pot shots at such a weak analogy but it must be pointed out that historical context matters a lot.
There you go, adding more valued comments to the blog again.
And the James Soper of 1947 would have been like, “These prices are way too high. I’m gonna keep renting till the crash comes (… in 1981).”
And they said that the core would be the last to drop…
Great pic Local Fool
I think we all agree that that was when Victoria was big enough and they should have stopped it from growing then.
The source chart for CRD adds this “ Saanich, Ladysmith, Logan Lake, Highlands, View Royal and Lantzville not included because values are calculated on school board rather than municipal level” https://infogram.com/prop-values-1hke60mez0y325r?live
Here’s a doc that does include Saanich, and it’s down 2% ( – 2.4% in sd61 and -1.3% in SD63) https://eforms.bcassessment.ca/Market%20Movement%202019.pdf
So am I blind or did they forget about Saanich in the CRD?
Nice. Pretty much what I estimated based on prelim sales data. Oak Bay down the most because high end was weakest. Some relatively good deals in that 1.5M+ space were had last year and it’s still sluggish
1947 overhead picture of the Baker Brick Foundry, over what would eventually become Mayfair Mall. Many structures in Victoria were built using bricks made right here at this factory.
Disoriented? Camera orientation is south east. Note the T-shaped intersection at the lower left side of the picture. That is the corner of Tolmie and Oak Street, where Staples, Toys R Us and the upper parkade entrance to Mayfair is now. The bottom left is where Mayfair Lanes would come to be (and has now been demolished) and where an Esso Station is now. The frontline row of houses near the top are on Alder St – and right below them through the marsh is where Blanshard Street would eventually be built.
Change in assessed value:
Source, and where you can look up other B.C. regions:
https://www.cbc.ca/news/canada/british-columbia/property-taxes-assessments-2020-bc-1.5413518
My guess is less than 1% of new listings in Victoria were as a result of spec tax……complete non-factor. Just more complexity added to tax system and add another department to make the government even more bloated.
Sales: 7300
SFH: $800k
Condo: $410k
Rates: flat
If nothing else it will temper sellers expectations a bit and put a drag on the economy as well. Wealth effect in reverse and even though the market in Vancouver has rebounded somewhat people look at their assessments and base some of their feelings of wealth on it.
Extremely low new listings too over there. I know a couple people that didn’t sell at the peak and now they refuse to because they saw how much more they could have sold for just a couple years ago. I suspect the high end in Vancouver will take a long time to regain that high though. That was not local factors driving
Yeah condo affordability is actually middle of the road historically so not even that stretched but I have a hard time with current prices still so keep predicting underperformance instead. I just don’t see the value in condos unless they have a good cap rate.
Spec tax was also a big nothingburger after all the wailing about it. Can’t see any significant increase in new listings
Yeah high end is still very weak for sure. Seems like activity is all in condos and low end detached. Which is a good thing because that likely means it is more local buyers but prices still nutty over there.
Wouldn’t be surprised to see some price more price compression happening there next year with low end up and luxury down
Entirely depends on if they’ve spent it already. If they follow Patrick’s move up whenever possible, then they’ve taken that equity and plowed into getting an even bigger mortgage.
The Vancouver assessments reflect estimates from July 1, 2019 vs July 1, 2018.
June 2018 was about the peak in Vancouver prices (HPI index for all housing types in Greater Vancouver- see the chart), and it fell 10% in the year to June 2019. So those assessment numbers shouldn’t come as a surprise. As for what it “bodes”, who knows, but you can see that the HPI has been about flat (down 1%) since July 2019 to current (Dec 2019), so that’s about half of the current assessment year done.. https://www.rebgv.org/market-watch/MLS-HPI-home-price-comparison.hpi.all.all.2019-12-1.html
FWIW, it looks like the average accuracy (error) of the predictions (of the 3 housing metrics ) from the board was 7.0%, so you can see how you compare to average.
Gate really nailed it, within 1.25% on all 3 metrics (as well as nailing the BOC rate in the “bonus” round)! You’ve got everyone’s attention for a year!
I suspect that this year might not be anything other than fairly flat. Not a proper prediction but I dont seem to understand what is holding this market up,
Here you go folks… 2020 numbers +/- ~1% 😉
Sales: 7800
SFH: $805K
Condo: $425k
BoC rate: 1.5%
2020 Sales: 7125
Avg SFD price: $835k
Avg condo price: $442k
BoC rate: 1.5%
But, compared to what the prices were 5-10 years ago the prices are still way up. So most home owners will still have a ton of equity in their houses. A correction like this might actually be good for the overall economy if it makes housing more affordable and allowing more people to return/come to work in the area, instead of fleeing to more affordable areas.
House assessments in Vancouver
If our economy is as driven by real estate as they say, this doesn’t bode well, regardless of the last few months of average sales numbers.
2020 Sales: 6789
Avg SFD price: $780K
Avg condo price: $410k
BoC rate: 1.5%
Fairly happy with my predictions but I totally missed the boat on condos; I really ignored the role of affordability which is absolutely crucial in the current market. If people can afford it they buy it, even if the value is suspect. For example, massive surge in prices of 2 bed/2bath wood-framed Langford condos which I wouldn’t have bet on in a million years. A couple of factors in this market segment, stress test and we didn’t see a flood of inventory as developers shifted to building apartments instead of condos.
My 2020 predictions
2020 Sales: 7,300
SFH Median: $800k
Condo Median: $415k
BOC: 1.75%
Sales 7800
Sfh 840
Condo 435
Rates 1.75
My assessment (Gonzales) down 1%
Was the condo median $427K? If so that would mean Gate (and me too) take it, with a guess of $425K – it missed by $2K vs VIC RE Newbie’s $3K.
2020 will likely be boring – I think we’ll be looking at flat rates and 2-3% gains in median prices. Sales will only slightly inch up.
2021 could be wildly different if the US political situation changes significantly.
SFH: $816K
Condo: $440K
Sales: 7400
BOC: 1.5%
High end of Vancouver still looks like it’s cratering. I think spring will tell the real tale.
And in last place Hawk…LOL
SFH 853k
condo 452k
sales 8326
boc 1.5
2020 Sales: 6745
Avg detached price: $777k
Avg condo price: $369k
BoC rates: back to 1.5 by EOY