September 16, 2014 11:32 am
Updated: September 16, 2014 11:43 am

What boom? Home prices under pressure everywhere east of Toronto

Headlines trumpeting strong momentum for the country's housing market are overlooking faltering conditions in eastern Canada.

THE CANADIAN PRESS/Paul Chiasson
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The country’s real estate association put out fresh price and sales figures for August this week, and nationally, home prices appear to still be growing quite strongly.

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But like politics, in real estate, all matters are local. And in regions east of central Ontario, things are looking rather sluggish at the moment, BMO said in a new research note on Tuesday.

“Keep in mind that the strong national growth largely reflects big gains in three major cities—Toronto, Calgary and to a lesser extent, Vancouver,” BMO economist Robert Kavcic said.

MORE: Vancouver, Toronto, Calgary driving housing market higher

In fact, half of Canada’s 22 largest cities are all exhibiting strong signs of a slowdown.

“Another glaring trend is a clear drop-off in housing market conditions virtually anywhere east of Toronto,” Kavcic said. “No city east of The Big Smoke is in the top half of the price-growth ranking right now.”

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Western movement

Kavcic said there’s been a steady exodus out of Atlantic Canada this year, mainly west to Alberta. While there hasn’t been as much emigration out of Quebec, economic conditions have been weaker than regions further west, depressing home values in the province.

None of this is new or altogether unexpected by experts, but headlines trumpeting sustained boom times for the housing market overlook conditions across many markets, Kavcic said.

MORE: Migration to Alberta is exploding

Though the BMO economist is not expecting strong price growth to return to markets east of Toronto soon, the economist, echoing others, suggested that with the far larger U.S. economy firmly on the mend, there will be spillover benefits for Quebec and regions further east.

“The thinking is that the economy is actually going to pick up a bit,” Kavcic said.

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