Below is the housing excerpt from BMO`s October Provincial Monitor (click here to download full report )
BMO: The Canadian housing market has cooled notably in recent months, with sales slumping more than 11% since March and price momentum ebbing in many cities—the stricter mortgage rules that took effect July 9th appear to have thrown some ice on an already-cooling market. But, real estate is local, and trends vary considerably across the country. As of August, most (12 of 22) major cities/regions of the country were still seeing balanced markets, while 6 exhibited tight conditions that favour sellers and 4 favoured buyers:
Highlights of Some Notable Markets:
Calgary: Re-awakening… Activity is improving thanks to rising demand (strong population and income growth) and a gradual drawdown of the excess supply put up during the prior (2005-07) boom. Prices measured by the MLS HPI were up 6.5% y/y in August, and have regained about half of the declines seen during the recession, and conditions are on the cusp of a sellers’ market. Note that Calgary remains relatively affordable compared to Vancouver and Toronto, with prices little more than 4x median income.
Vancouver: Correction underway… There’s no longer any doubt that a correction is underway in Vancouver. Sales have plunged 26% y/y in the latest 3 months, while average prices have shed more than 10% in the past year. The more representative MLS Home Price Index, which accountsfor quality and sales mix changes, was also below year-ago levels in August (though just 0.5%), and the sales-to-new listings ratio was the lowest since the financial crisis, hinting at more softness ahead. At 10x estimated family income, Vancouver valuations are by far Canada’s loftiest.
Toronto: Mixed picture… Activity has softened significantly, and while we’re not quite seeing a full-scale buyers’ market, weak September sales results suggest Toronto is quickly moving in that direction. Note the diverging price trends between well-supplied condos (+1.7% y/y) and scarce detached single-family homes (+7.0% y/y)—there’s also potential for significant resale condo supply to hit the market in 2013.
Windsor: The dark horse… A recovering auto sector, 4-year labour deals struck between the Big Three and CAW, and a return to positive population growth are all supportive of Windsor’s nowfairly tight (by historical standards) and inexpensive market