Calgary is once again Canada’s strongest housing market, Toronto defied crash predictions and the Vancouver market sprung back to life. That’s the summation of a new report from BMO Economics that examines the state of housing in Canada’s four largest markets.
According to the report, titled “Canadian Housing Update: Tale of Four Cities,” 2013 provided a series of pleasant surprises. (Tweet this)
“Far from extending last year’s deep sales dive on mortgage-rule turbulence, the market pulled up sharply and is now on an above-normal flight path,” said BMO senior economist Sal Guatieri in the report.
The breakdown for each city is as follows:
Calgary
Alberta’s most populous city is a “sellers” market. After going through a correction several years ago, Calgary regained its title as the strongest major housing market in the country. While November figures show some slowing, resale listings and new home inventories are “lean,” the report says, giving sellers the upper hand. Meanwhile, housing starts have hardly kept pace with an exploding population.
“Strong economic and population growth will encourage an upward trend in Calgary’s house prices, though higher borrowing costs will moderate the gains,” stated Guatieri.
Toronto
For the most part, the markets that make up Canada’s largest city are “balanced,” but sellers rule and bidding wars prevail in some areas where listings are scarce.
“The looming supply of condos, high valuations of detached homes, elevated levels of household debt and moderately higher interest rates should slow overall price increases in 2014,” said Guatieri.
“We expect Toronto house prices to stabilize in 2014, and to remain at risk of declining moderately when interest rates normalize.”
Vancouver
Like Toronto, Vancouver is in “balanced” territory, according to BMO. However, affordability is still a concern, with benchmark prices topping eight-times the average family income. For young buyers, condos will remain a more affordable option, as BMO says prices have fallen slightly in the past year and are little changed from six years ago.
“After keeling over in the face of tougher mortgage rules and the temporary suspension of the Immigrant Investor Program last year, the canary in Canada’s home mine has sprung back to life,” stated Guatieri.
“But we continue to expect Vancouver’s detached house prices to decline moderately in the medium term, and condo prices to remain flat in 2014.”
Montreal
Quebec’s largest housing market was the only market out of the four studied deemed to be in “buyers” territory, thanks to an upswing in new listings. And despite appreciating 155 per cent since 2001, affordability remains healthy, says the report, with benchmark prices at four-times family income.
“Like Calgary, Montreal should remain affordable even when rates normalize, with house prices holding steady in 2014,” said Guatieri.
“With fewer detached homes built, condo construction flourished in recent years, leaving the city with a moderate overhang of vacant units. While condo sales have picked up recently, they remain soft, as investors are wary of a higher condo rental vacancy rate.”
Here’s the four-city breakdown in easy to digest chart-form.
If you’re keen on perusing the full report for yourself, click here.
