Photo: James Bombales
Earlier this year, BMO senior economist Robert Kavcic singled out three Canadian housing markets with the economic fundamentals for a price boom in 2019. Now, it seems that his predictions are poised to come true.
Hamilton, Ottawa and Quebec City have some of the strongest labour markets in the country and, as a result, jobseekers are flocking to the cities, driving prices upwards.
“Employment prospects are typically the biggest factor driving migration trends, and we often simplify this by saying there are two key reasons to move: To find a job, if you don’t have one; or to take a better-paying job, if you do,” writes Kavcic, in the report.
Livabl spoke with industry experts to get their take on where each city is headed in 2019.
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Ottawa has great jobs and a low price tag
Kavcic wrote that BMO has been “bullish” on Ottawa for some time, as the city boasts the highest median employment income per family in the country, while its jobless rate is two percentage points below any other Canadian city.
“What you have with Ottawa is an incredibly strong job market, and the high incomes that come with that,” says Ottawa-based Royal LePage broker Adam Mills. “At the same time, you have home prices that remain well below markets like Toronto and Vancouver.”
The city has seen month-over-month gains in sales and prices all year, largely dodging the effects of stricter mortgage rules, which have bogged down other Canadian markets.
“It’s the relatively low price point of homes that makes it affordable for a lot of buyers, even with the stricter mortgage rules, in a way that pricier cities aren’t,” explains Mills.
He predicts that the city will continue its strong performance into 2019, though activity may dip slightly as the Bank of Canada continues to hike interest rates.
Hamilton is well positioned to act as a “release valve”
Hamilton has long benefited from its close proximity to the booming Toronto job market. It will likely continue to see homebuyers priced out of the Toronto downtown core flock to its relatively affordable offerings — Central 1 Credit Union predicted last month that the city would see a 3 percent home price increase in 2019.
“Keep in mind that labour force metrics reflect the location of home, not work,” writes Kavcic. “And, given that Toronto has been held back by significant pressure on housing affordability, cities like Hamilton..within commuting distance of Toronto jobs, have served as a release valve.”
Hamilton-based realtor Mike Heddle agrees, and says that the city’s location will likely cause home prices to increase in 2019.
“The city has incredibly strong fundamentals, that makes it an attractive region for buyers,” Heddle tells Livabl. “And of the course the lower price point doesn’t hurt.”
Quebec City will continue a slow but steady upwards trajectory
The Quebec housing market has had a strong 2018, and Quebec City was no exception. Kavcic points to the city’s solid employment rate and low price point as factors in its continued success. “It boasts some of the most affordable housing in Canada,” he notes.
“The strength of the Quebec job market is built on a lot of jobs coming into the area in the last two years,” Quebec Federation of Real Estate Boards market analysis department manager Paul Cardinal tells Livabl. “When you have people earning a relatively good income, but home prices below what you find in Ontario and BC, that leads to a jump in activity.”
Quebec City, along with Montreal, has been posting month-over-month sales and price gains all year, and Caridnal predicts the trend will continue into 2019.
TD economist Rishi Sondhi agrees, saying that the market’s relative affordability will mean that it’s less affected by rising interest rates in the new year.
“The outlook is comparatively favourable for Quebec…where good affordability will limit the impact of higher rates and [and the new mortgage rules],” Sondhi tells Livabl.