Michael Babad – The Globe and Mail

Location, location, location

A new Bank of Montreal report highlights the sudden shift in Canada’s regional housing markets, notably the “very weak” nature of those on the Prairies.

Comment: Well, duh, oil kinda tanked there.

As The Globe and Mail’s Tamsin McMahon has chronicled, the plunge in crude prices has put a damper on the markets in oil-sensitive regions like those in Alberta.

“While Canada’s housing market balance has turned slightly weaker overall, location has become increasingly important,” said senior economist Robert Kavcic of BMO Nesbitt Burns.

“Market balance on the Prairies is very weak (resource prices), and prices in most markets there have begun to slip alongside elevated supply and a drop in confidence,” he added.

“Ditto for Atlantic Canada, though poor demographics are playing a bigger role there (at least outside Newfoundland).”

Which, as Mr. Kavcic put it, means British Columba and Ontario have to “carry the weight.”

Comment: Which, aside from Calgary booms and busts of the past decade, has been the case for a long time.

Those markets found to be very weak, at 10, outnumber those in the other categories. There are three markets found to be weak, two that are very strong, one that is strong and six that are balanced.

Whether a market is strong, weak or balanced is based on current conditions against a 20-year average.

Here’s what he found, as of February:

* Vancouver’s market is balanced, with average prices on a three-month basis up 3.3% from a year earlier, resales up 13.6% and the average home price 11 times greater than the estimated median family income for 2015. Sales are 14.3% above the 10-year average, again on a three-month basis.
* Using the same measurements, Victoria prices are up 0.4%, and prices 14.4%, and the price-family income ratio stands at 5.4% in a balanced market. Sales are 3% below the 10-year average.
* Calgary and Edmonton are, of course, taking a hit from the oil rout.
* Calgary prices are down 0.7%, and sales are down 27%, with a price-family income ratio at 4 in a very weak market. Sales are almost 18% below the 10-year average.
* Regina, Saskatoon and Winnipeg also fall into the very weak category. As do Ottawa, Kingston, Ont., Halifax and the provinces of Prince Edward Island and Newfoundland and Labrador.
* Montreal, St. John and Kitchener-Waterloo, Ont., are deemed just weak.
* Then there are the “very strong” centres of St. Catharines and Windsor, Ont., and the Hamilton-Burlington as simply strong.
* Among those found to be balanced, besides Vancouver and Victoria, are Toronto and the Ontario centres of Sudbury and Thunder Bay.
* In Toronto, average prices are up 6.6% and resales 8.6%. Sales vs. the 10-year average are up 5.2%, and the price-family income ratio is at 7.5.

“Note that Vancouver’s market balance is within rounding error of being classified as ‘strong,’ while Toronto’s balanced market reflects an extremely tight detached segment, offset by much more supply in the condo sector,” Mr. Kavcic said.

Comment: Toronto is NOT balanced. It is a strong market, a sellers market.

And just today, the Toronto Real Estate Board reported that resales in the first two weeks of this month climbed 11.8% from a year earlier, with the average selling price up 10.6% to $620,106.

—————————————————————————————————–
Contact Laurin Jeffrey for more information – 416-388-1960

Laurin Jeffrey is a Toronto real estate agent with Century 21 Regal Realty.
He did not write these articles, he just reproduces them here for people who
are interested in Toronto real estate. He does not work for any builders.
—————————————————————————————————–