A home in Kitimat, B.C., April 8, 2014.John Lehmann/The Globe and Mail
The Globe's Real Estate Beat offers news and analysis on the Canadian housing market from real estate reporter Tara Perkins. Read more on The Globe's housing page and follow Tara on Twitter @TaraPerkins.
The Canadian Real Estate Association bolstered its forecast for home price growth this year, but that doesn't mean homeowners across the country should cheer. The red-hot Canadian home prices that we keep hearing about are not actually a national phenomenon.
"Head anywhere east of Toronto and ask about the hot housing market, and you might get a funny look," Bank of Montreal economist Robert Kavcic writes in a research note.
The big home price gains are largely confined to Calgary and detached homes in Toronto, he points out. There are also increases in Vancouver.
"Meantime, prices in Quebec and Atlantic Canada have been drifting sideways or down for a good 3 years now, hammering home the point that real estate is still very local," Mr. Kavcic writes.
The Canadian Real Estate Association said Monday that the national average sales price over the Multiple Listing Service was up 7.1 per cent in May from a year earlier at $416,584. But if you take out Vancouver and Toronto, the average was up 5.3 per cent at $336,373.
Averages can be skewed by a higher level of sales in pricier markets. The MLS Home Price Index, which seeks to be a more apples-to-apples comparison of prices, rose 4.8 per cent.
CREA upped its forecast for home prices this week, saying it now predicts the national average price will rise 5.7 per cent this year to $404,300. In March it was forecasting a 3.8 per cent increase to $397,000.
Leslie Preston, an economist at Toronto-Dominion Bank, notes that in addition to the geographical disparities, condo buyers are not faring as well as house buyers are. "Strength in prices reflects increases for single-family homes and townhouses," she writes. "Prices for condos are up a more modest 2.9 per cent over a year ago."
The regional disparities might explain why the federal government is reluctant to do any more to cool the housing market, Mr. Kavcic suggests. "One reason policy makers might be a bit hesitant to act again soon is that strong price gains are confined to a few select markets, or even sub-markets, while a wide swath of the country (at least geographically) is seeing downright dreary conditions."