Photo: Kurt Bauschardt/Flickr
The April housing numbers from the Canadian Real Estate Association (CREA) emphasized how hard it is to pigeonhole the country’s housing market. The average sale price for an existing home rose 9.5 per cent, year-over-year, to $448,862 in April. But removing Toronto and Vancouver from the equation leads to a much more modest increase of 3.4 per cent to an average sale price of $339,893.
Last month saw cooling markets in oil-producing provinces, more heat in Toronto and Vancouver and mixed activity across the rest of the country. There are a number of different stories unfolding, depending on the region. Here’s how some of the leading economists from Canada’s big banks interpreted the latest CREA data:
The three-way split
Based on the April figures, RBC Economics separated Canadian cities into three camps: hot, cold and subdued, noting that “markets in Alberta and Saskatchewan hit by the plunge in oil prices continue to see low levels of activity. Elsewhere in the country, both resales and prices still show very modest gains at best,” excluding Toronto and Vancouver, where conditions remain hot.
Interestingly, Douglas Porter, Chief Economist at the Bank of Montreal had a slightly more positive interpretation: “There are a number of smaller markets that are showing some real spark as well,” noting that “there is a lot more to housing’s remarkable resilience than just [Toronto and Vancouver].” He pinpointed Hamilton-Burlington, London, Kitchener-Waterloo, St. Catharines and Windsor as cities which saw healthy growth in both sales and prices last month.
The big ones
In April, Greater Vancouver and Greater Toronto were largely responsible for pushing up the average home price in Canada, with their prices climbing at annual rates of 8.5 and 8.43 per cent, respectively. However, TD Economics believes the tightest and priciest housing markets could see some change. Economist Dina Ignjatovic said that “government bond yields – which influence mortgage rates – have been trending higher in recent weeks, mortgage rates could move higher later this year, dampening demand in these markets.” That could mean a slight cooling in both cities.
RBC Economics voiced concern over supply in Ottawa and Montreal, where more stock, especially new condos, could put a futher damper on prices. Though Calgary and Edmonton are “now seeing a reversal of the surge in new listings that occurred late last year,” a positive sign, “Alberta’s housing markets still face substantial uncertainty with respect to the provincial economy. Another bout of seller anxiety cannot be excluded.”
TD noted that “while oil prices actually rose in April, they still remain low relative to where they were a year ago, and there is some lag – about 2 quarters – before this filters through to the rest of the economy.”