- Toronto and Vancouver see detached market softening,
but condo and townhouse prices continue to climb
- Millennials influence markets beyond Toronto and Vancouver as they consider areas with greater affordability
- BMO Economics expects continued high levels of home building and only moderate deceleration in sales
TORONTO, March 22, 2018 /CNW/ - As peak home buying season in
Canada approaches, affordability remains very good, according to the BMO Spring Housing
Affordability Report released today. The Toronto and Vancouver
markets are the exception, with softening in detached sales and prices, though condo prices continue to rise.
The perennially hot markets of Toronto and Vancouver are
largely driven by the impact of millennial home buyers creating price increases in the condo and townhouse markets. These regions
are also supported by strong economies, good demographics, and an abundance of high tech/high salary jobs.
"Millennial buyers and international migrants are cushioning the decline in detached home prices in the hottest markets," said
Sal Guatieri, Senior Economist, BMO Capital Markets. "We expect millennials to also bolster other
markets like Montreal and Ottawa, as those looking for better
affordability consider options beyond Toronto and Vancouver."
Existing Home Sales (as of February 2018)
|
Region
|
Sales (% change)
|
Price (% change)
|
|
m/m
|
y/y
|
y-t-d 2018
|
y/y
|
y-t-d 2018
|
Canada
|
-6.5
|
-16.9
|
-10.8
|
-5.0
|
-2.3
|
Toronto
|
-8.2
|
-35.4
|
-30.4
|
-12.3
|
-9.6
|
Montreal
|
0.0
|
5.1
|
8.0
|
4.7
|
0.0
|
Ottawa
|
7.9
|
-3.1
|
-0.1
|
2.2
|
3.9
|
Winnipeg
|
-2.3
|
-12.4
|
-7.7
|
3.4
|
3.0
|
Halifax
|
-4.8
|
9.0
|
14.2
|
11.1
|
9.7
|
Vancouver
|
-15.8
|
-8.9
|
1.8
|
6.8
|
10.7
|
Calgary
|
-8.6
|
-14.6
|
-6.3
|
1.4
|
0.4
|
Edmonton
|
-3.8
|
-3.5
|
2.4
|
2.6
|
0.8
|
Regina
|
0.0
|
15.2
|
10.1
|
-0.7
|
-2.7
|
MLS Home Price Index (national)
|
6.9
|
7.3
|
Source: Canadian Real Estate Association
|
Mr. Guatieri also added that millennials' disproportionate influence on the market will likely start to wane only as we look
ahead to next decade, similar to what we saw with the stagnation of baby boomer home buying in the 90s.
Beyond millennials, there are other factors affecting the market on a national scale, such as unemployment rates being among
the lowest on record, coupled with the highest population growth seen in a quarter century. Interest rates are also still
historically low, although more hikes are expected in 2018.
"It is likely we will see interest rates go up another 50 basis points this calendar year," said Mr. Guatieri. "Even these
moderate increases will start to erode affordability for markets that haven't been much affected by tougher mortgage rules and
other cooling measures."
"As homebuyers navigate the current market landscape, it is increasingly important that they are aware of all the factors that
can affect affordability," said Martin Nel, Head, Personal and Small Business Banking, BMO
Financial Group. "This goes beyond regional regulations, and those planning to buy a home should speak to a mortgage specialist
about pre-approvals and stress-testing which takes into account changes that could happen beyond when they make a purchase."
Mr. Nel added that BMO has recently extended their mortgage pre-approval guarantee period to 130 days, the longest of any of
Canada's major banks, to help prospective homebuyers with added convenience and additional time
to finalize their plans.
Overall, this year will mark similar, though not as extreme, activity for the housing market. There will be still-high levels
of home building, though no overbuilding in any market. But supply constraints will exist in Vancouver and Toronto, even for condos, as a result of lengthy building
approval processes and zoning restrictions. There will be slower home price growth compared to last year, and a moderate decline
in the level of home sales.
For more information on all stages of the home buying process, visit https://www.bmo.com/main/personal/mortgages/ or speak to a BMO
mortgage specialist at your local branch.
About BMO Financial Group
Serving customers for 200 years and counting, BMO is a highly diversified financial services provider – the 8thlargest
bank, by assets, in North America. With total assets of $728
billion as of January 31, 2018, and a team of diverse and highly engaged employees, BMO
provides a broad range of personal and commercial banking, wealth management and investment banking products and services to more
than 12 million customers and conducts business through three operating groups: Personal and Commercial Banking, BMO Wealth
Management and BMO Capital Markets.
SOURCE BMO Financial Group
View original content: http://www.newswire.ca/en/releases/archive/March2018/22/c4824.html