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Forecast 2019 – where are Canada’s hottest housing markets?

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Forecast 2019 – where are Canada’s hottest housing markets?

2019 web

Wondering where Canada’s hottest housing markets are, as 2018 comes to a close and 2019 is just around the corner? Well, that all depends on who you ask.

Two of Canada’s large realty firms – Royal LePage and ReMax – both issued their 2019 housing market outlooks on Dec. 11.

Yes, the very same day.

Rather than produce two stories on the exact same topic, just from different sources, we thought it would be interesting to compare them. And while there are some commonalities in their forecasts, there are also some interesting discrepancies.

There is no ‘Canadian’ market

Let’s begin with the headline of ReMax’s 2019 Housing Market Outlook: “Canadian home prices expected to increase by 1.7 per cent in 2019.”

Yeah, about that. Forget that headline. As we recently wrote, those national numbers are pretty meaningless. It’s like trying to summarize the weather, temperature or traffic as “Canadian.”

But, just for comparison purposes, ReMax estimates Canadian home prices will grow 1.7 per cent in 2019; Royal LePage, 1.2 per cent.

National numbers that do matter are interest rates, GDP growth and employment. Then there’s immigration, which affects some markets more than others, mortgage regulations and housing supply. All of these factors are the key drivers of real estate. But more on that later.

Now let’s take a look at some of the regional highlights.

GTA

ReMax says:

  • Toronto average prices down 4% in 2018 to $789,181
  • Toronto average prices forecast to rise 2% in 2019 to $804,964

In Toronto, rising interest rates and the mortgage stress test were the two major factors affecting market activity in 2018, with average sale prices dropping by four per cent from $822,572 in 2017 to $789,181 in 2018, and unit sales down by 16 per cent. Lack of affordability in the single-detached segment will make it difficult for buyers wanting to enter this market. Resale condos, on the other hand, now represent almost 37 per cent of total sales, fueled by affordability.

ReMax Housing Market Outlook, select major markets

Region 2018

 Average Home Price

 

2019

Average Home Price

(Forecast)

Year-over-Year

(%)

Vancouver $1.05M $1.01M -3.0%
Edmonton $379,539 $360,562 -5.0%
Calgary $487,399 $487,399 0.0%
Saskatoon $333,187 $343,182 0.6%
Regina $322,500 $322,500 0.0%
Winnipeg $323,001 $335,921 4.0%
Windsor $299,750 $329,725 10.0%
London $379,654 $398,636 5.0%
Kitchener-Waterloo $473,275 $487,473 3.0%
Hamilton-Burlington $707,949 $849,538 2.0%
Barrie $477,839 $492,174 3.0%
Oakville $1.08M $1.13M 5.0%
Mississauga $705,406 $733,622 4.0%
Brampton $577,846 $600,959 4.0%
Durham $594,585 $612,422 3.0%
Toronto $789,181 $804,964 2.0%
Ottawa $678,670 $705,816 4.0%
Halifax $299,982 $308,981 3.0%
St. John’s $265,523 $265,523 0.0%

 

Elsewhere in Ontario

Rising interest rates and the stress test continue to make it difficult for prospective buyers in Barrie, Oakville and Durham regions.

“This is particularly true for first-time buyers and single Millennials, as evident in cities like Brampton, Kingston and Durham,” says Christopher Alexander, executive vice-president and regional director, ReMax of Ontario-Atlantic Canada.

Hottest in the province

The hottest market in Ontario? Windsor, which showed price growth of 13 per cent in 2018, to $299,750, with another 10 per cent increase forecast for 2019. London is also expected to be strong, with prices to increase another five per cent next year, after rising 17 per cent this year to reach $379,654.

 

Royal LePage says:

  • GTA average price in 2018 $844,000
  • GTA average price forecast to rise 1.3% to $854,552

“Compared to the record pace of home appreciation seen in 2016 and 2017, the GTA housing market is now positioned for much healthier and sustainable growth in future years,” says Chris Slightham, broker and owner, Royal LePage Signature Realty.

Many regions outside of Toronto’s core saw price declines in 2018, a result of overshooting in previous years. The continued population growth should cause the suburbs to stabilize and reignite price growth. In addition, the potential subway expansion into the suburbs should stabilize and increase home prices in close proximity to new transit infrastructure.

Elsewhere in Ontario

The median price in Ottawa is expected to increase 2.5 per cent in 2019 to $487,910, benefitting from the city’s healthy economy and high income per household, driven by the public and technology sectors.

Interestingly, Royal LePage also notes that neither the new mortgage rules nor recent interest rate hikes have notably affected Ottawa’s housing market.

 

Highlights from other Canadian markets

The star performer of all major Canadian markets in 2019? Montreal, according to Royal LePage.

“Quebec will out-perform the nation in 2019,” says President and CEO Phil Soper. “Like other regions of the country, the economy is strong and people are working. What is different is affordability. We have to remember that Montreal sat out the rapid home price inflation we saw in Vancouver and Toronto this decade, and in Calgary the decade before.”

As for the ReMax outlook for Montreal, Quebec did not participate in this year’s forecast.

 

 

Royal LePage Market Survey Forecast

Region  

2018 Aggregate Home Price
(Year End Estimate)


2019 
Aggregate
Home Price 
(Forecast)
Year-over-Year (%)
Canada $631,000 $638,257 1.2%
Greater Toronto Area $844,000 $854,552 1.3%
Greater Montreal Area $409,000 $421,306 3.0%
Greater Vancouver $1.28M $1.29M 0.6%
Ottawa $476,000 $487,910 2.5%
Calgary $484,000 $473,104 -2.3%
Edmonton $386,000 $378,691 -1.9%
Winnipeg $306,000 $309,829 1.3%
Halifax $321,000 $326,096 1.6%
Regina $327,000 $311,505 -4.7%

 

Influential factors

Now for more on those national factors that do influence real estate.

“I would call attention to two factors influencing our forecast that deserve special consideration,” says Soper. “Firstly, home prices are appreciating, albeit at a snail’s pace. Secondly, the Canadian market is supported by strong economic fundamentals, including a robust rate of new household formation and excellent employment growth.

“The future for Canadian housing remains bright, perhaps too bright. With an increasing number of gainfully employed people looking to put a roof over their heads, and the scarce availability of rental accommodation, policy makers in our major markets will once again be struggling with housing shortages. More than an affordable housing problem, we will once again be facing an overall housing supply crisis.”

As for interest rates, the Bank of Canada held its benchmark interest rate of 1.75 per cent on Dec. 5, citing a weaker than expected energy sector. Further rate increases are expected in 2019, making it more difficult for Canadians to buy a home in 2019.

The Bank forecasts GDP will increase 2.1 per cent in 2019, a modest increase over 2018, while Canada’s unemployment rate fell to 5.6 per cent in November, the lowest on record since 1976.

RELATED READING

5 things we can learn from real estate in 2018

7 factors that will affect GTA housing in 2019 – and 5 reasons to consider buying NOW

GTA moving into balanced market for 2019

GTA new home market gains further momentum in October

Delays in approval process contributing to housing affordability issue in GTA

What the GM plant closure means for Oshawa economy and housing market

 

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Video – a journey through indigenous art in Canada

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Video – a journey through indigenous art in Canada

An assignment to explore indigenous art in Canada led National Geographic photographer Adam Ferguson from Montreal to Northern Quebec, Canada, and into the creative heart of a welcoming community of Cree people, to capture how Indigenous artists reveal and sustain their culture.

He met artists in both urban and wilderness settings, all sharing what it means to sustain and reclaim their heritage amid 21st century Canada. As an Australian, Ferguson experienced something culturally familiar — a way of life still quietly, yet profoundly connected to the land. And in witnessing this connection, he found inspiration for his own art.

To read more, click here

Credit to National Geographic and Nadine St-Louis of Sacred Fire Productions

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Source: Century 21 Canada

Canada’s most and least expensive places to buy – and guess where Toronto is

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Canada’s most and least expensive places to buy – and guess where Toronto is

Source: Century 21 Canada
Source: Century 21 Canada

In yet another potential dagger in the heart of prospective first-time homebuyers, a new study from Century 21 Canada underlines the growing affordability issue in Toronto.

The price-per-square-foot (ppsf) of downtown Toronto rose more than 10 per cent in the last year and continues to top Ontario home prices. Meanwhile, prices rose and fell turbulently in GTA suburbs and other communities in the province.

Source: Century 21 Canada
Source: Century 21 Canada

The ppsf of a condo in downtown Toronto rose to $903 from $819 last year, making Toronto Canada’s second most expensive city for homes, after Metro Vancouver. Meanwhile, the ppsf for a detached house in Markham and Richmond Hill each fell 24 per cent to $379 and $445 respectively, while condos in Peterborough rose to $255. Home prices in Ottawa and Guelph were more stable, rising 4.65 per cent to $225 and 4.5 per cent to $397 ppsf, respectively.

UNPREDICTABLE YEAR

“It has been an unpredictable year in Ontario housing prices, with the price per square foot rising and falling from community-to-community and even suburb-to-suburb,” says Brian Rushton, executive vice-president of Century 21 Canada. “Much like in Canada’s other major centres prices fall rapidly once you are outside the downtown core of Toronto, and homes in those communities remain relatively affordable. Even with an increase of almost five per cent, Ottawa remains one of the least expensive places to live in Ontario.”

Toronto’s rising prices are underscored in another survey earlier this year by Century 21 Canada, asking Canadians to rate their current living situation. The survey found only 39 per cent of Toronto residents are living in close to their ideal situation (eight out of 10 on a 10-point scale), while 13 per cent reported their situation is far from ideal. At 26 per cent, a large number of Toronto residents say an apartment or condo is their ideal living situation.

RELATED READING

New condos in Toronto hit record high in prices

Canadian housing market to moderate in 2019 but growth to continue in Ontario and Toronto

Home prices and affordability still a concern – CMHC Mortgage Consumer Survey

5 steps to solving the housing affordability issue in Ontario

 

 

 

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Canada Outlook NEW

Canadian housing market to moderate in 2019 but growth to continue in Ontario and Toronto

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Canadian housing market to moderate in 2019 but growth to continue in Ontario and Toronto

Canada Outlook NEW

 

By Wayne Karl

Canada’s housing market should see a moderation in both housing starts and sales, while home prices are expected to reach levels that are more in line with economic fundamentals such as income, job and population growth. This forecast for 2019 and 2020 is drawn from the 2018 Housing Market Outlook from the Canada Mortgage and Housing Corp. (CMHC).

Source: CMHC Housing Market Outlook
Source: CMHC Housing Market Outlook

Nationally, CMHC’s outlook for 2019 projects total housing starts to edge down and range between 193,700 to 204,500, with the downward trend expected for both single and multi-unit starts. MLS sales are expected to be between 478,400 and 497,400 units annually while MLS prices should lie between $501,400 and $521,600.

“Our key takeaway from this year’s outlook is moderation in Canada’s housing markets for 2019 into 2020,” says Bob Dugan, chief economist, CMHC. “Housing starts are expected to decline from the higher levels we’ve seen recently. We expect resales in 2019 and 2020 to remain below recent peaks while prices should reach levels that are more in line with economic fundamentals such as income, job and populations growth.”

Ontario recovery

After dampened market activity in 2018, existing home sales and housing starts in Ontario, particularly in single-family homes, will post a partial recovery in 2019. Buyers are expected to re-enter the market on the strength of stronger than expected job growth and in-migration, before the downward trend in starts and sales resumes in 2020.

Source: CMHC Housing Market Outlook
Source: CMHC Housing Market Outlook

GTA growth

With balanced conditions prevailing in the GTA, CMHC expects moderate sales growth and home prices growing in line with inflation. The rising costs of homeownership will result in strong rental demand, while new supply will add some upward pressure on vacancy rates. Toronto buyers should see more housing choices as builders concentrate their efforts on new highrise projects.

OTHER REGIONAL HIGHLIGHTS

BRITISH COLUMBIA
Housing starts activity and MLS sales in BC should moderate, as economic and population growth slows while MLS average prices are expected to see a flatter growth profile through 2020.

Vancouver
Over the next two years, Metro Vancouver’s resale market will see lower sales, higher inventories of homes for sale and lower home prices compared with recent market highs. Through 2018, demand and home prices softened across all market segments and local geographies.

PRAIRIES
Buyers’ market conditions in Alberta and Saskatchewan should gradually shift to a balanced market with gradual improvement in economic and demographic fundamentals. Balanced market conditions in Manitoba are expected to continue.

Calgary
Various factors will push and pull the demand for housing in Calgary in 2019 and 2020. Calgary’s economy will experience stronger growth in population and employment. This will help support demand and lift sales in 2019 and 2020. However, the average MLS price will continue to face downward pressure but is expected to stabilize in 2019 and modestly rise in 2020.

QUEBEC
Housing starts and sales of existing homes will both be sustained, however, slower economic growth and rising borrowing costs will moderate activity through 2020. Starts will continue to be dominated by the apartment market segment, while demand for resale single-detached homes will remain relatively strong.

Montreal
In 2018 and 2019, rental housing demand will increase slightly faster than supply in Montreal, which will put some downward pressure on the vacancy rate. Demand will be supported by rising net migration over the forecast horizon.

ATLANTIC CANADA
The Atlantic region will see sustained activity, notably in Nova Scotia, where existing home sales and average prices should trend higher while rental demand will drive growth in apartment construction.

RELATED READING

7 factors that will affect GTA housing in 2019 – and 5 reasons to consider buying NOW

 

 

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CMHC CMA

Toronto and Hamilton highlight evidence of overvaluation, CMHC says

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Toronto and Hamilton highlight evidence of overvaluation, CMHC says

CMHC CMA

One day after the Bank of Canada raised its overnight lending rate – and hinted at further increases in the near term – the Canadian housing market got another sobering reminder this week: the latest Housing Market Assessment (HMA) from Canada Mortgage and Housing Corp. (CMHC).

CMHA warns that Canada’s overall housing market remains highly vulnerable, though conditions of overvaluation are easing as a whole.

The quarterly report acts as an “early warning system” for the country’s housing markets – an important tool supporting financial and housing market stability.

In Ontario, Toronto and Hamilton home prices are moving closer to levels supported by housing market fundamentals such as income, mortgage rates and population. Still, these markets continue to exhibit a high degree of overall vulnerability.

Source: CMHC Housing Market Assessment
Source: CMHC Housing Market Assessment

Toronto continues to show moderate evidence of overheating and price acceleration, and strong evidence of overvaluation, CMHC says. On the plus side, there is weak evidence of overbuilding, as the number of completed and unsold units is at a historic low.

Hamilton CMHC
Source: CMHC Housing Market Assessment

In Hamilton, moderate evidence of overheating exists, due to a high sales-to-new listings ratio in eight of the last 12 quarters. Price growth has persisted over the last 12 quarters, contributing to moderate evidence of price acceleration. Overvaluation in Hamilton has decreased on average, but moderate evidence remains since house prices are considerably higher than levels supported by economic fundamentals, CMHC says.

OTHER MARKET HIGHLIGHTS

  • Evidence of overbuilding remains high in Edmonton, Calgary, Saskatoon and Regina, so those markets continue to receive a moderate degree of vulnerability in the overall assessment.
  • A low degree of overall vulnerability is sustained for Ottawa, Quebec City, Moncton, Halifax and St. John’s where house prices continue to follow the path of fundamentals.
  • Montreal’s resale market is close to overheating, creating significant upward pressure on prices as a result of a sharp tightening between supply and demand.
  • In Winnipeg, evidence of overbuilding as well as the degree of overall vulnerability changed from low to moderate, reflecting increases in the inventory of newly completed but unsold units.

 

RELATED READING

7 factors that will affect GTA housing in 2019 – and 5 reasons to consider buying NOW

GTA housing market correction coming to an end, ReMax says

GTA new home market shows some improvement in September

 

 

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The View From Inside: Housing Industry An Economic Driver

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The View From Inside: Housing Industry An Economic Driver

Value of new home construction, residential renovation has grown to $56.2 billion
By Geranium

When you purchase a new home, you are engaging in a transaction that reverberates across many parts of Canada’s economy. To illustrate, we are sharing some interesting facts about the housing industry in our country and have extracted information from some of the most recent studies and reports undertaken by organizations, government agencies and industry associations.

  • The housing industry in Canada is critical to our economy. Reports indicate that in 2016, 69 per cent of Canadians owned a home, and four in five millennials wanted to purchase a home. 1 (CHBA)
  • In Canada, homes account for $4 trillion in assets. 1 (CHBA)
  • Figures from 2016, show that residential construction impacted 1,008,392 jobs, generated $59.4 billion in wages and $138.3 billion in economic activity. 1 (CHBA)
  • Looking at the micro level and taking York Region as an example, in 2016 there were 8,926 new housing starts (the number of homes beginning construction), which were key to the economic growth of the area. On-site and off-site jobs in new home construction are a major source of employment in York Region – 23,749 people have jobs in this industry and earn $1.4 billion in wages. 1 (CHBA)
  • Provincially, the value of new home construction, residential renovation and related impacts of construction grew 55 per cent since 2007 to a value of $56.2 billion. 2 (OHBA)
  • Every construction crane you see in the GTA represents up to 500 new onsite and off-site jobs in construction and related fields. 3 (BILD)
  • The types of jobs involved in the building of homes include urban planners, engineers, lawyers, marketers, sales representatives, accountants, designers, as well as electricians, plumbers, framers, and labourers. 3 (BILD)
  • In 2015, the industry contributed more than $30 billion to the GTA’s economy, resulting in billions of dollars in tax revenue collected by all levels of government. This revenue will contribute to repairing existing infrastructure like roads, sewers, schools and hospitals. 3 (BILD)
  • Homeownership rates in Toronto have increased by 23 per cent over the last 35 years (11 per cent in Ontario overall), putting the region close to the highest among “world class” cities. 4 (CANCEA)
  • In the Greater Toronto Hamilton Area in 2017, 45 per cent of households lived in detached homes, 35 per cent in apartment/condo buildings and 20 per cent lived in housing types such as semi-detached, row homes, townhomes, multiplexes and lowrise buildings. 4 (CANCEA)
  • There is an increasing focus on a work-play-live lifestyle. Land developers have moved away from viewing projects as one-offs in favour of planning complete neighbourhoods that include wellness, retail, entertainment, office and more. 5 (PwC)

At Geranium, we are proud to develop and build entire planned communities for the spectrum of the new housing market and to be part of this important industry in Canada.

Information sources:
1: tinyurl.com/ya4zy6lr
2: tinyurl.com/y9cbxhsa
3: tinyurl.com/y89vep6q
4: tinyurl.com/ya3czvdx
5: tinyurl.com/y8g6f95s

Celebrating more than 40 years in business, Geranium has created master-planned communities including more than 8,000 homes in Ontario.

Geranium.com

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