In April 2015 Canada’s big city metro SFD prices all caught a bid with Toronto prices breaking out again to the upside for a new record peak. It’s all about the land that real estate sits on; big money is willing to pay a premium for sitting on it.
The chart above below the average detached housing prices for Vancouver, Calgary, Edmonton, Toronto*, Ottawa* and Montréal* (the six Canadian cities with over a million people) as well as the average of the sum of Vancouver, Calgary and Toronto condo (apartment) prices on the left axis. On the right axis is the seasonally adjusted annualized rate (SAAR) of MLS® Residential Sales across Canada.
Price gains were accomplished on a push higher in sales volume of the Canadian national MLS residential
annualized housing sales data. Trophy hunters are looking for well located SFD properties in hot markets and the hoi polloi want in before they are priced out.
Can the “posted retail” 5 year fixed rate mortgage low of 4.64% (sub-3% on the street) drive the hunger games into overtime in 2015? Or is the commodity crash signalling an upcoming major correction for Canadian housing? Your opinion is welcome.
Mattress money has gushed into condos with no respect for fundamentals or plan for contingencies that may be required if Pit of Gloom II develops and one must write off capital gains and or rely on employment earnings to subsidize negative yields.
It remains interesting to note that the combined average price of a Vancouver, Calgary & Toronto condo is currently 25% more expensive than a median priced Montreal SFD and note also that in the spring of 2006, those 3-City average condos zoomed 58% in price (over $100,000) in just three months as the buy side of the market freaked out over the inversion of the 10yr less the 2yr spread as it went negative (Yield Curve).
The inflationistas have made a big bet and it’s showing up in the supply of rentals.