TRREB and Altus update 2020 housing forecasts as pandemic hits market

Two of the Toronto region’s foremost authorities on the housing market are readying updates to their 2020 forecasts as the COVID-19 pandemic casts a long shadow on home buying activity and early impacts on purchaser behaviour are becoming increasingly apparent.

Altus Group, which tracks sales, pricing and construction in Toronto’s new home market, had projected a strong year for sorely needed home construction in the region. The massive social and economic disruption caused by COVID-19 has, of course, led the firm to work toward revising its forecast for 2020 and 2021.

The problem with preparing a new forecast, as Altus Group Executive Vice-President Patricia Arsenault articulated in a special report published in March, is that it remains unclear how long and severe the disruption to the market will be.

Arsenault said that early May will be Altus Group’s target date for releasing an updated home construction forecast for the Toronto region. The longer timeline should allow her team to gather enough data to make confident projections and allow more time to pass to evaluate the severity of the disruption.

In the meantime, she provided an early look at a range of possible scenarios, including a worst case that assumes a prolonged disruption comparable to the 2008-2009 global financial crisis that would see home construction decline 28 percent compared to 2019 levels.

Arsenault’s best case scenario “acknowledges that housing starts in 2020 would, other things being equal, largely reflect sales – ‘demand’ ‐ that has already occurred, given the limited extent of speculative building and inherent sales to start lags. But it also assumes that the construction industry is only slightly impacted by labour and/or material shortages or full site shutdowns.”

For those looking for an update that’s expected to arrive earlier, the Toronto Regional Real Estate Board (TRREB) said late last week that it would be working towards publishing a revised sales and pricing outlook for the region’s resale market by mid-April.

TRREB, which recently published its Toronto market data for March, also provided some “preliminary market outlook guidance” ahead of preparing the more robust update to its 2020 forecast for the region. Like Altus Group, the board is waiting on the availability of more data on the impact of the social distancing measures as well as the Toronto region’s economic growth and employment picture.

In its preliminary COVID-19 update, TRREB said if infections peak in the spring and strict social distancing measures are subsequently relaxed through the summer then market demand should rise in the fall and winter.

“Extremely” low mortgage rates and the return of previously furloughed employees to the workplace should be supportive of a recovery in home sales, TRREB said.