OPINION: In June, the monthly rise in home prices was the strongest in a decade, with all markets except for Calgary and Edmonton experiencing gains above the historical norm. What is even more striking is that this surge occurred after strong gains in the previous months. As a result, on a year-to-date basis, home prices are already up a whopping 6.8%, well above the historical average of 4.0% for the first six months of the year. On a year-over-year basis, the dichotomy continued in the Canadian housing market with gains for the sub-index which includes Toronto, Vancouver, Victoria and Hamilton accelerating over 16% while deflation persisted in the seven other regions covered (top chart). In regards to the continued strength in Vancouver and Toronto, it’s worth noting that both labour markets are still booming, a sharp contrast with what we observe in the rest of the country (middle chart). Employment at record highs combined with record low supply (bottom chart) and mortgage rates continue to fuel home price inflation in those markets.
In May, the Teranet–National Bank National Composite House Price Index™ was up 1.8% from the previous month, the largest May increase since 2008. For the first time since June 2013, prices were up on the month in all of the 11 metropolitan markets surveyed. Gains exceeded that of the countrywide index in four of those […]
OPINION: The dichotomy continues on the Canadian home resale market. Year-over-year price growth exceeds 10% in Vancouver, Victoria, Toronto and Hamilton, while deflation persists in the seven other regions covered (top chart). New trends are also emerging. First, Vancouver is in a league of its own with prices up more than 20% over the last twelve months. Second, the surge in house prices in that city does not anymore mostly characterize single-family homes (price up at a record 25.1% in May) but also condos (prices up 13.9% in May against 6% in January – middle chart). To a lesser extent, this new trend also applies to Toronto. In that city, availability of land had restricted the supply of low-rise residential buildings, and steep house price growth used to be concentrated in that segment. But with record sales of apartments since the beginning of the year, condos prices have moved up in sync with those of other types of dwellings lately (bottom chart). The generalization of steep price growth to condos should feed concerns about affordability in these metropolitan areas and household indebtedness.
In April, the Teranet–National Bank National Composite House Price Index™ was up 1.2% from the previous month, the largest April increase since 2008. Though prices were up on the month in 10 of the 11 metropolitan markets surveyed, the gain of the composite index was due mostly to the three markets with the largest weights: […]
OPINION: For those living in Vancouver, Victoria, Toronto and Hamilton, the housing boom continues. Quite a contrast with the seven other metropolitan areas covered by the Index, where prices have on average declined on a y/y basis over the last ten months (top chart). Within the group of four hot housing markets, Vancouver is in a league of its own, with a y/y price gain of almost 20%. It must be said that the resale market in that metropolitan area is very tight judging from active listings and sales published by the Real Estate Board of Greater Vancouver (middle chart). While some will keep blaming foreign capital for the housing boom in Vancouver and Toronto, it’s worth noting those cities are also blessed with the strongest labour markets in the country and hence are able to accommodate large migration flows (bottom chart – left panel). Especially in Vancouver, existing home sales are at a historically high level while supply is at a trough. Fortunately, real estate promoters and homebuilders are aware of that situation. Consequently, housing starts in Vancouver since the beginning of the year were almost 50% above the highest levels of the previous 15 years (bottom chart – right panel). This reaction in new housing construction should sooner or later help alleviate the price pressure on Vancouver’s housing market.
In March, the Teranet–National Bank National Composite House Price Index™ was up 0.8% from the previous month, the largest increase for a March since 2008. Though prices were up on the month in six of the 11 metropolitan markets surveyed, the gain of the composite index came mostly from a 2.8% jump in the Vancouver […]
OPINION: In Vancouver, after seven large monthly house price increases in a row, prices were virtually flat in September (top chart). This is consistent with the recent loosening in the home resale market, as sales dropped each month since their record level last February for a cumulative decline of 44% (middle chart). Prices in Vancouver have not fell so far because market conditions have just started to loosen from the tightest conditions on records. We see home price deflation starting soon (10% expected over twelve months). Toronto is now the red hot market. Home sales broke records in each of the last three months. But the historically low supply (in terms of the number of homes listed for sale) is also contributing to market conditions that are the tightest on records (bottom chart). With such a combination of high demand and low supply, monthly house price growth surged to 2.9% on average over the last four months. While the latest measure (maximum debt-service-to-income ratio for insured 5-year fixed-rate mortgage tested against posted mortgage rate) might reduce demand, the low supply still argues against a significant price decline in the Queen City.
OPINION: The last monthly increase in the composite index, the largest for a month of February since the recession, is totally due to the price jump in Vancouver. Without Vancouver, the index would have been about flat. The 12-month two-digit price gain in Vancouver is consistent with data reported by the Real Estate Board of Greater Vancouver, suggesting record sales last February together with historically low active listings (middle chart). Also, the Toronto Real Estate Board reported record existing home sales for a month of February. The high level of sales in both cities might be explained in part by the fact that the new measure requiring at least 10% down payment on the portion of the purchase price between $500,000 and $1 million applies to new mortgage applications received on February 15 or later. It is not binding for mortgage applications received between the announcement on December 11 and February 15 that do not conform to the measure, inasmuch as the mortgage is in place by July 1, 2016. So sales in these expensive cities can be stimulated over the coming months as well. In other areas, prices have overall declined lately (bottom chart), in particular in Calgary, where home price deflation has been the sharpest over the last twelve months.
In February the Teranet–National Bank National Composite House Price Index™ was up 0.6% from the previous month, the largest increase for a February since the recession. Though prices were up on the month in six of the 11 metropolitan markets surveyed, the gain of the composite index came entirely from a 3.2% jump in the […]