TD starts the week off when a 20+ page report on the Canadian housing market. They have revised their over-valuation of Canadian real estate to 8% -down from 10%- due to rising personal income and weaker price growth. However, the outlook varies greatly from city to city. Below is a quick recap starting with our city:
Calgary: TD is forecasting Calgary average home prices will increase 3.8% in 2014 – the highest increase across all of Canada.
Momentum is starting to pick up moderately in Calgary’s housing market. Existing home sales were less impacted by tighter mortgage insurance rules, given a relatively healthier balance in the market at the time they were introduced.
However, Calgary’s housing market has shifted into a seller’s market, as evidenced by the current level of the sales-to-new listings ratio. As a result, home prices have come under some upward pressure in recent months, rising by 9-12% on an annual basis over the ﬁrst three months of 2013 – outperforming every other major Canadian metropolitan area.
Growth in Calgary home prices is likely to moderate from the current pace, but should remain slightly positive over the forecast horizon. Furthermore, home sales are likely to continue to grow moderately and housing construction ought to occur at the pace of household formation.
Edmonton: the housing market should remain a star player among Canada’s largest markets throughout the forecast horizon. Most importantly, Edmonton home prices are likely to continue to grow moderately over the next few years, in contrast to the mild contractions expected in some other major markets.
Vancouver: Home prices are likely to remain under moderate downward pressure over the next few years given a high inventory of homes on the market. Overall, Vancouver home prices are likely to have fallen 15% by the time the correction is over in early-2014. This means that they are just over halfway in their home price correction journey.
(Mike`s note: TD is saying that Vancouver is only halfway through their 15% correction..but the chart above is showing 1.9 & 1.4% price increases in 2013/2014?)
Regina: Canada`s top performing market. Home values will continue to appreciate over the next few years – by 4% per year – a pace that is more sustainable and in line with income growth.
Saskatoon: Home prices are likely to continue to grow at around 4% over 2013 and 2014, a pace that is more in line with household income growth for the region yet outpacing national average home price growth.
Toronto: Existing home prices are expected to fall 6% peak-to-trough by early 2014 relative to where they are now. Housing starts are likely to track in an annual range of 25,000 to 30,000 over the next two years– about half the pace recorded in 2012
Winnipeg: Housing sales are likely to stabilize at their current lower levels, while existing home prices are expected to remain ﬂat.
Ottawa: Looking forward, prices are likely to continue to correct
over the next two years. The Ottawa housing market has been recording a soft landing since 2010, which will likely continue through the next few years.
Montreal: Expected to endure a moderate price correction over the next few years. Sales are likely to stabilize at current levels, after declining by 7% in 2012, while prices are expected to fall 5% from current levels by mid-2014.
Quebec City: TD expects to see moderate downward pressure on prices in Québec City over the next two years. Prices are likely to fall by 6% peak-to-trough, or by an average of 2% per year over 2013 and 2014, underperforming most markets with the exception of Toronto and Vancouver.
Halifax: Overall, the Halifax market is likely to outperform othermajor Canadian markets in 2013 and 2014. Prices are anticipated to grow by an annual average rate of 1.5% over the next two years and construction activity will likely remain relatively stable.
St John: likely to stabilize after ﬁve years of contraction as an improvingeconomic backdrop and attractive affordability offsets the demographic headwinds
To download and read the entire report, click here