What’s in store for Canada’s real estate market this spring? Well, this is usually busy season in housing, and it will likely be the case this year – though for different reasons in various areas.
The national average sale price increased 17 per cent, year-over-year, in January, according to the Canadian Real Estate Association (CREA).
But, take British Columbia and Ontario out of the equation, and the national average sale price actually declined by 0.3 per cent.
Economies and housing sectors in markets such as Calgary, Edmonton and Saskatoon are feeling the pinch of the extended slowdown in oil and gas. For existing homeowners, this isn’t great news; average home prices in Calgary dropped 3.05 per cent year-over-year in January, and in Saskatoon they fell 2.11 per cent.
For prospective buyers, this means opportunity.
Naturally, buyers might not too enthused about getting in when prices are dropping, fearing their home’s value will go down after they purchase. But look at the longer term. In Calgary, prices have increased 14.29 per cent over the last three years; in Saskatoon, 2.07 per cent.
“It’s a great time to buy a home in Calgary,” the CHBA – Calgary Region says.
A WELCOME PAUSE IN THE GTA?
Following one of the biggest years ever for new homes in 2015 in the GTA, in January of this year, sales of new homes were down, prices were mostly flat and new inventory was limited, BILD says.
This year has started off slower. In January, there were 1,614 new homes purchased in the GTA, down 10 per cent from the long-term average and 22 per cent below January 2015. Prices remain relatively unchanged.
“It is important to understand that one month does not a trend make,” BILD president Bryan Tuckey says. “The next few months will tell a more accurate story about the market with the introduction of additional new projects across the GTA.”
On the resale side, meanwhile, the Toronto Real Estate Board reports that things continue to hum – if not motor – along.
February saw a record number of home sales through TREB’s MLS System – rising 21.1 per cent to 7,621 transactions, compared to February 2015.
“Even after accounting for the leap year day, sales were above the previous record for February set back in 2010,” says TREB President Mark McLean. “Sales were up strongly from the 15th day of the month onward as well, despite the new federal mortgage lending guidelines coming into effect that require at least a 10 per cent down payment on the portion of purchase prices between $500,000 and $1,000,000.”
Seller’s market conditions continued throughout the GTA, as the average selling price was up by 14.9 per cent annually to $685,278.
With such significant home price growth, a slight pause may not be such a bad thing, allowing the market to take a breath and opening a window of opportunity for prospective buyers.
Toronto is expected to be one of Canada’s growth leaders again this year, according to the Conference Board of Canada.
Toronto’s economy is expected to grow by 2.8 per cent, which will make it the third fastest growing metropolitan economy in Canada this year, the Board says in its Metropolitan Outlook: Winter 2016.
Neighbouring Hamilton is also going to have a strong 2016, and is expected to grow by 2.2 per cent this year, following a similar increase in 2015.
The housing industry in the GTA has already raised concerns about the affordability issue.
Now it’s becoming such a serious matter that banks are citing concern as well.
In its latest Housing Trends and Affordability Report, the normally straight and narrow RBC Economics Research took the opportunity to be a little cheeky on the topic. “Homeownership in Canada remains affordable – for buyers outside Vancouver or Toronto,” read the headline on its release.
On a national level, housing affordability in Canada deteriorated slightly in the final quarter of 2015, as RBC’s Q4 Housing Affordability measures continued to highlight marked regional differences.
“The significant rise in homeownership costs in Vancouver and Toronto had a dominant influence on Canada-wide affordability measures in the fourth quarter of 2015,” says Craig Wright, RBC Chief Economist. “While prices continue to escalate in Vancouver and Toronto markets, there are few signs that housing affordability is problematic elsewhere in Canada. Homes in other markets remain affordable with the situation either improving or remaining fairly stable.”
Most of the affordability-related stress in Toronto is concentrated in the single-detached segment, RBC says.