Despite all efforts to cap Canada’s housing market, home buyers are breaking records as average sales and home prices hit a five-year high in 2013.
The 2014 Remax Canadian Housing Market Outlook found that, despite some regional slowdowns, two thirds of markets boomed to match or exceed 2012 levels. The report cites an improving global economy, low interest rates and increasing consumer confidence as cause behind red hot markets.
“Canadian consumers remained remarkably steadfast in their determination to achieve homeownership in 2013,” Remax stated in a release, adding that growth is slated to grow further in 2014.
Avid Buyers Push Prices Higher
The report, which is based on the top 25 markets in Canada, forecasts that a total of 466,000 homes will be sold by year end – a three per cent improvement from the 453,372 that changed hands in 2012. The average price for 2013 home sales rings in at $380,000.
And expect that price point to just keep getting steeper. 2014 average prices are expected to increase another three per cent to $390,000. But don’t think that will deter home buyers – they’ll just keep coming back for more, with sales numbers anticipated to hit 475,000 that year.
A Smarter, Stronger Home Buyer
The burgeoning market is sure to bring further correction from Finance Minister Jim Flaherty, who has already imposed four sets of mortgage restrictions in as many years in efforts to deter buyers from entering the market, as Canadian debt and mortgage credit levels spiral higher. Last summer, rules that capped maximum amortizations for high-ratio mortgages (mainly the first timer segment) to 25 years sent some buyers back to the savings drawing board; the Remax report suggests that they’ve returned in full force, and readier than ever to enter the market.
“It was quite a turnaround in Canadian real estate markets after a softer start to the year,” says Elton Ash, regional executive vice president, RE/MAX of Western Canada. “Following an initial period of adjustment, first-time buyers pushed forward with delayed intentions, stimulating activity at all price points. With renewed momentum and enthusiasm in place, resale housing is once again poised for growth in 2014.”
He adds that the latest crop of buyers come prepared with better down payments and re-checked expectations – a sign they’ve taken heed of last year’s rule changes.
Single Family Housing In Scarce Supply
Such strong demand is creating some challenges, particularly for urban homebuyers seeking the traditional detached home with yard and picket fence. Builders are quickly running out of room, especially in mountain-encircled Vancouver, and Toronto, which is bordered by Ontario’s Greenbelt region. Indeed, a recent study conducted by Central Credit 1 predicts home prices in the GTA will double over the next 25 years.
Regional Housing Market Top Peformers
Toronto wasn’t the only hot Canadian market in 2013, though – here are the top regional performers, according to Remax:
- Vancouver, Kelowna and Victoria (+ 6%)
- Windsor-Essex (+ 6%)
- Edmonton (+ 5%)
- Hamilton-Burlington (+ 5%)
Quebec and Atlantic Canada were the only two areas not expected to exceed 2012 sales levels this year, though this is expected to rebound as overall economic conditions improve in 2014.