In Canada’s crazy housing market, ‘the hot get hotter’
Many of the country’s big local real estate boards have reported in recent days monthly sales numbers for October. Here’s a tidy summary of what they tell us:
“The priciest Canadian markets became even less affordable in October.”
That was the response Thursday from BMO senior economist Sal Guatieri, after he reviewed the latest data.
Underlining what others have been saying this year, Guatieri noted a few weeks ago that the Great Canadian Housing Boom isn’t a national issue at all, but largely a story of three cities (albeit big ones): Vancouver, Toronto and Calgary.
‘The hot get hotter’
And the narrative gained steam last month.
In Vancouver, existing home sales surged last month by 15 per cent. Prices in Canada’s most expensive city to buy property accelerated a further six per cent to touch fresh highs.
In Toronto, sales were up a solid 7.7 per cent, according to TREB, the local real estate board, with gains across all home segments, including the closely watched condo market.
Average prices climbed nearly nine per cent year-on-year in Canada’s biggest city (booming prices for detached homes were tempered by a tame 2.5 per cent rise for condos).
Meanwhile in Calgary, the number of homes that swapped hands rose more than 10 per cent while prices jumped 9.5 per cent in October compared to the same month last year.
Compare those numbers to some other big markets.Click here to view data »
Consider Regina, the second-biggest city in Saskatchewan where economic conditions have been better than everywhere else except Alberta.
Sales in the city of 180,000 were up just three per cent. Average prices climbed four per cent.
Further east in Ottawa, October sales were 2.9 per cent higher than a year ago – and average prices were actually down 1.2 per cent.
Montreal hasn’t delivered its October tally yet, but in September, sales were up seven per cent, the city’s best September in three years. Prices rose two per cent.
Regina, Ottawa and Montreal can serve as comfortable proxies for conditions almost everywhere in Canada, with three big exceptions.
The note from Guatieri aptly said it Thursday. “The hot get hotter” while most other markets are plodding along at present.
‘Low, low rates’
Guatieri and other housing market watchers suggest good job markets, an influx of immigrants and millennials and other “fundamentals” are supporting the heated conditions and booming prices in Vancouver, Calgary and Toronto.
So are record low interest rates.
“Strong support from immigrants and millennials are definitely a factor, but it’s doubtful prices would climb this fast without a big push from low, low interest rates,” the economist said.
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