Many experts think that Canada’s in a housing bubble; no secret there. But, other analysts have compared our nation’s housing market to a balloon rather than a bubble; and instead of popping, it will slow deflate. And with the recent statistics out of the Teranet-National Bank Composite House Price Index, it seems as though the latter group might have been right – and that deflating might be happening in some markets right now. The Index looks at repeat sales of single-family homes and in this latest survey, 11 of Canada’s hottest markets were surveyed to see what the housing prices were doing. The results showed that while there has been a drop of 0.2% between November and December, prices are still 6.8% higher than they were a year earlier.
Five of the 11 markets surveyed actually showed a drop in prices from November to December. Those looking for a Vancouver or Toronto mortgage have reason to rejoice; homes in these areas saw a decrease of 0.3%. And it’s not just Vancouver that looks like it’s starting to correct itself out west – Victoria, B.C. saw the biggest drop in home prices across the country, with a total decline of 0.8%. And what area of Canada saw the biggest increase in home prices? You’ll have to go to the Maritimes to find these inflated prices, as homes in Halifax jumped 0.9%. Those in the other six markets remained “generally balanced” said the Index, which is also good news for those currently looking for an Ottawa mortgage.
But Canadians shouldn’t get too cocky just yet about avoiding a bubble. Even though prices went down month-over-month from November to December, home prices on a whole went up by an average of 6.8% across the country when compared with last year’s numbers. The markets that showed the highest increase were: Toronto, with an increase of 9.9%; Winnipeg, with a jump of 8.7%; Vancouver, with a climb of 8.2%; and Quebec City and Hamilton, both with an increase of 7.7%.
This is good news for anyone that thought Canada was in danger of living in a housing bubble; and the stats certainly show that we’re not quite at the 10% over-evaluation that many experts, including Bank of Canada’s governor Mark Carney, predicted that we were. But, the question remains: will we be able to maintain that just-above-bubble status? The Canada Mortgage and Housing Corporation has said that within the next two years, home prices in the country will rise each year, but that sales of homes already on the market and new home starts will remain level.
For now, any news about a cooling of the housing market is good, so that we can avoid the ever-worrisome bubble. And those looking for a home in Toronto or Vancouver – two of the country’s hottest markets – have the most reason to rejoice.
