The Canadian Real Estate Association has come out with some new stats that should quell any talk of a housing bubble, at least for a little while. The CREA has taken a survey of the five most active housing markets in Canada – the Greater Toronto Area, Greater Vancouver, the Fraser Valley, Calgary, and Greater Montreal. The results show that while home prices have been increasing steadily in the last several months, that increase is now happening at a slower pace.
Last month the rate of increases year-over-year was only 5.1%, the lowest increase since June 2011. The largest increase was still seen in Toronto with a 7.3% increase, and it may not be surprising that Vancouver came in as the second highest, with a 6% increase. And in Vancouver, it’s not just a matter of the increase in home prices that are slowing, but sales too, are also down. But even with figures still showing that prices are rising, they’re below the levels of 10% increases that have been seen in these markets over the past year.
Gregory Klump, chief economist for CREA, has given several reasons for the decline in rising house prices. He says, “The compound effect of previous changes are working to slow the market and certainly prevent the market from forming a bubble. Year-over-year price gains have been shrinking and that continued in February.” Klump also says, “Prices continue to rise but the sales are trending lower, so on balance, when you take all the trends into account, it does appear as if the market is beginning to form a top. I think for this year, we’re going to see the market continue to cool, and I think the average for the year nationally will be a gain in the two to three percent range.” Those trends are the fact that people can no longer afford the high prices of Toronto mortgages, and that the mortgage tightening rules that have been imposed over the past year and a half have made it even more difficult for people to own their own home.
The survey done by CREA showed that there was cooling in all the markets that were studied, with the only exception being the prices of two-storey single-family homes. The results should encourage those who think Canada is in a housing bubble that’s going to pop any day now, as well as homebuyers that are looking to own a home, but don’t want to pay today’s top dollar for it.
