3 key predictions for Canada’s spring 2019 housing market
Canada’s newly-minted hottest housing markets are going to see prices soar even higher this spring while struggling regions will continue plodding on.
At least that’s what an economist with one of Canada’s Big Six Banks is expecting to see as spring approaches. Canada’s hottest markets aren’t cooling down anytime soon Marc Desormeaux, an economist with Scotiabank, suggests both Ottawa and Montreal will see “pretty strong price gains” in the coming months compared to historical norms.
The two markets have broken out over the past year, leaving the country’s previous top-performing markets, Toronto and Vancouver, in the dust. “Ottawa and Montreal are both well into seller’s market territory,” Desormeaux tells Livabl, noting that these markets have sales-to-new listings ratios of about 80 percent. A common gauge of market balance, the ratio is typically calculated by dividing sales by new listings in a given month and expressed as a percentage.
A ratio of 100 percent suggests homes are selling at a rate as fast as new listings are appearing, and generally anything over 60 percent indicates a seller’s market and below 40 percent means a market favour’s buyers, meaning lower prices. In January, prices surged 7.1 percent in Ottawa and 6.3 percent in Greater Montreal, according to the Canadian Real Estate Association (CREA). Quebec’s economy grew by close to 3 percent last year, Desormeaux notes, and the province has a very low unemployment rate.
These two factors are supportive of continued housing demand in the near-term. “Ontario has been in the midst of quite a strong [economic] expansion,” he adds. The worst is over for Toronto Toronto also stands to reap some rewards from a healthy provincial economy, but market conditions aren’t stacked in favour of seller’s as they are in provincial counterpart Ottawa. “At present, the sales-to-listings ratio indicates that the Toronto market and a lot of nearby Ontario markets, are in roughly balanced conditions,” says Desormeaux, anticipating more-modest price gains ahead. Last month, Greater Toronto Area home prices edged up 2.7 percent on a year-over-year basis, and the sales-to-new listings ratio — January’s was 49.7 percent — suggests runaway price gains of the past won’t be repeated any time soon.
Western markets to remain depressed Alberta, once home to hot housing markets benefitting from an oil boom, has struggled to adjust to an environment of lower oil prices and worsened employment prospects that have come as a result. Looking ahead, it doesn’t appear markets like Calgary and Edmonton will have legs this spring. “[A]n overhang of units accrued since the oil price correction remains intact and will likely limit home sales activity going forward,” Desormeaux wrote in a mid-February report. “We continue to monitor conditions in Alberta.” In that report for Scotiabank Economics, Desormeaux noted there was a sales bump in Greater Vancouver to start the year.
But the new provincial Speculation and Vacancy Tax is yet another headwind piled on a market BC realtors say is still dealing with the effects of tougher mortgage qualification rules. “That’s a key difference there between what’s going on in Toronto… and what’s going on in southern BC,” Desormeaux tells Livabl. “There’s the additional level of provincial policy coming into effect in British Columbia.”