dream-home-real-estate

Canada’s residential real estate market showed strong growth in the fourth quarter of 2015, led by hot Vancouver and Toronto markets, finds Royal LePage.

In 2016, the real estate company expects continued price increases in most markets, but not at the pace that has been the recent norm. Instead, the national real estate market is expected to slow later this year, principally due to the effects of a dampened economy in Western Canada and eroding affordability in Toronto and Vancouver.

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The Royal LePage National House Price Composite, compiled from property value data in 53 of the nation’s largest markets, finds the price of a home increased 6.5% year-over-year to $500,688 in the fourth quarter. The price of a two-storey home rose 7.7% year-over-year to $610,134, and the price of a bungalow increased 5.4% to $420,082.

During the same period, the price of a condo increased 3.1% to $341,448. Royal LePage forecasts that the aggregate price of a home in Canada will increase 4.1% for 2016 compared to 2015.

“The frenetic pace of our country’s largest housing markets should moderate throughout the year ahead,” says Phil Soper, president and chief executive officer, Royal LePage, who adds  Greater Vancouver- and Toronto-area prices will settle down thanks to real estate appreciation that has significantly outpaced job and wage growth.

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“Through the recent period of depressed oil prices, property prices in Canada’s energy-centric regions, particularly Alberta and Newfoundland and Labrador, were more resilient than most onlookers had expected,” says Soper. “Consumers, reluctant to sell their homes at what they perceived to be a discount to their true value, simply withdrew from the market, resulting in steady house prices and a drop in unit sales volume. In the coming year we expect to see the delayed impacts of the slowing economy and rising unemployment on the regions’ housing stock, with moderate declines in home values.”

In Quebec, home prices were relatively flat during 2015.  A lower Canadian dollar and robust  U.S. economic growth should fuel the service and manufacturing sectors in 2016, improving employment levels and consumer confidence, and lifting home prices.

“Montreal’s slow-growing real estate market is expected to be much more vigorous in 2016,” said Soper. “A recent economic opportunity study pointed to Montreal as Canada’s third ‘city to watch’ in 2016, just behind Vancouver and Toronto in growth potential.”

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Macroeconomic factors

The price of residential real estate in Canada will be more influenced by macroeconomic factors than by housing-specific variables, such as tighter regulation in the mortgage industry.

“The new federal government moved quickly with a policy change in the minimum down payment required to secure mortgage insurance,” says Soper. “The change will produce an added benefit akin to a slight tap on the brake for our two most costly cities. On a nationwide basis, we expect the number of transactions that this will impact to be minimal – significantly less than the initial industry reaction would lead consumers to believe.”

Further, the Bank of Canada is expected to keep its overnight rate steady through the spring market, extending low borrowing rates.

Read: Vancouver wants new taxes to tether soaring house prices

Originally published on Advisor.ca
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BOB THE BEAVER

The CDN Banks are itching to increase mortgage rates by a half a percent, as they do most every Spring. This usually influences people who are hesitant to decide to sell or buy homes to take action. Demand, not supply, determines the direction of prices. It is much easier to pull up buyers than pull down sellers. Thus, GTA, and most of Canada still has a lot of buyers to hold up prices, but sellers are still delaying putting their homes on the market unless they finally decide to downsize. It will likely be the “downsizers” that drive the value of residential real estate in Canada for the next decade. A major monetary crisis seems imminent so RRSP’s should be shuffled to protect value rather than speculate on growth for the next year or so. Once the monetary systems re-invents itself around 2018, we can expect real growth to spread through the new global trade agreements. Most middle class people will be more comfortable riding the financial storm with their net worth in real estate instead of the stock market casino electrons. If I thought politicians were geniuses they would deal with the middle class shrinking of net worth by making RRSP transfers to mortgage principal tax free, or at least at a nominal tax rate. The increases in middle class net worth in more secure tangible real estate assets instead of volatile stock market electronic gaming funds would help to push up our real growth entrepreneurial capacities. If you like this kind of analyses, then check out the Canadian Federalist Party (Virtual) website. JR

Thursday, January 14 @ 1:55 pm //////

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