BMO: Calgary Still One Of The Strongest Markets

Not much has changed with BMO’s assessment of the Calgary real estate market since last summer where they pronounced our city as “arguably the strongest market” in Canada.

In their North American outlook released yesterday, BMO reports that “Calgary is one of the strongest markets, with sales up 15% y/y amid reasonable valuations and solid growth in incomes and population,” with prices expected to rise further in Alberta in 2013.

On the other end of the scale, “Vancouver is the weakest major market because of poor affordability and the suspension of the federal Immigrant Investor Program. Existing home sales fell 14% y/y in January (though this marks an improvement on last year’s 31% dive) and reside 19% below the past decade norm for the month. Benchmark prices are off 6% from the spring and 3% from a year ago. With ten listings for every sale, buyers hold the upper hand; and prices would fall even faster if prospective sellers didn’t pull their homes off the market.”

Home sales have weakened in response to tougher mortgage rules, high household debt and reduced affordability in a few regions. In most areas, sales have returned to past decade norms following a tenyear boom that took ownership rates to record highs. Price growth has slowed too, though it remains generally positive. All housing markets are local, of course.

The housing section is summed up with:

Except for Vancouver’s bumpy ride, most regions are seeing a “soft landing”. 2013 should be no different, with prices expected to stabilize generally, rise further in Alberta, and fall moderately in Vancouver and Toronto

Interest Rates

Although the Bank of Canada continues to warn that rates should rise “over time”, it now believes a move is “less imminent” due to slower household credit growth. Modest growth, below-target inflation (0.8% in December), tighter credit rules, easy Fed policy, and a strong loonie argue against a rate hike. BMO expects the overnight rate to stay at 1% until the spring of 2014, before rising gradually to a more neutral 3½% in 2016.

You can read BMO’s outlook here

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