Facts run counter to the popular belief
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In recent times, Canada's housing market has been experiencing a series of dynamic shifts, with some regions showing signs of improvement while others continue to grapple with affordability issues.
According to the Canadian Mortgage and Housing Corporation (CMHC), rental housing prices in Quebec are increasing faster than wages, exacerbating imbalances. Particularly in Montreal, there's no sign of improvement in affordability for now. The price of houses in Montreal continues to rise due to limited inventory and sustained demand, but the city is expected to reach price levels similar to those during the pandemic by the end of the year.
Contrastingly, both Toronto and Vancouver have seen a significant increase in available inventory in recent months. The Canadian Housing Association (CHA) and the Canadian Real Estate Association (CREA) report this increase, with CREA indicating that activity in Ontario, British Columbia, and Alberta has been severely affected by trade chaos. Demand in Toronto and Vancouver is not keeping up due to uncertainty related to the trade war being waged by the United States, high prices in these areas, and changes in immigration rates and government policies.
The decline in the real value of houses in Canada is primarily due to the negative dynamics experienced in the markets of Vancouver and Toronto. The real price of a dwelling, as defined by CMHC, is the current market selling price adjusted for inflation. To obtain the "real price" in an economic sense, one would adjust these nominal prices for inflation using a consumer price index or GDP deflator to compare prices over time on an equal footing.
In practical terms, the CREA reports benchmark prices which estimate the price of a "typical" home in a region, reflecting current market conditions and housing attributes to track price trends more reliably than simple averages.
Housing starts in Quebec are currently at record levels, which could help ease the residential market in the coming months or years. However, data from the Federal Reserve may suggest homeownership is more accessible, but persistent overheating in Quebec makes it less so. The key factor for home buyers in Quebec remains income and paying capacity, as long as property values follow salaries, buyers do not lose their purchasing power.
In some municipalities in Quebec, affordability is deteriorating and is returning to a level reminiscent of the pandemic. Meanwhile, the decline in the real value of houses in Toronto and Vancouver has resulted in a decrease in house prices, as explained by CMHC. Independent economist Paul Cardinal estimates that it is indeed the markets of Toronto and Vancouver that have eased the most.
It's essential to note that while tools for buying a property, like the CELIAPP or the extension of the mortgage amortization period, increase demand, they do not address the issue of supply. The combination of these elements has resulted in a complex and evolving housing market landscape across Canada.
[1] Canadian Real Estate Association (CREA) website: https://crea.ca/ [2] Canada Mortgage and Housing Corporation (CMHC) website: https://www.cmhc-schl.gc.ca/ [3] Bank of Canada website: https://www.bankofcanada.ca/ [4] Statistics Canada website: https://www.statcan.gc.ca/
- Investing in real estate in Canada requires careful consideration of regional differences. While Montreal's housing prices continue to rise, the situation in Toronto and Vancouver presents a contrast – with a significant increase in available inventory due to trade issues and changes in immigration rates. (real estate, investing)
- In the realm of finance, the Canadian housing market is experiencing a complex evolution. The Canadian Real Estate Association (CREA) reports that benchmark prices can provide a more reliable indicator of price trends, while the decline in the real value of houses in Toronto and Vancouver indicates a decrease in house prices, as explained by the Canadian Mortgage and Housing Corporation (CMHC). (finance, real-estate)
