Canada’s two hottest housing markets in Vancouver and Toronto, fuelled by foreign money, keep defying gravity. Housing market analysts are pushing out their expectations—or perhaps hopes—for a return to normalcy.
As prices keep climbing beyond the growth of incomes, the Canadian economy becomes more vulnerable to a jump in unemployment, interest rates rising, or foreign capital leaving. Such triggers could ignite an even bigger economic meltdown.
The Canadian Real Estate Board (CREA) reported on May 16 the staggering April year-over-year home price increases in Greater Toronto (up 12.6 percent) and especially Greater Vancouver (up 25.3 percent).
Those two metropolitan areas continue to skew the national average sales price of $508K (up 13.1 percent). Excluding the two metropolitan areas, the national average sales price was $369K (up 8.7 percent).
Supply is disappearing in Vancouver and Toronto.
CREA chief economist Gregory Klump said people are becoming reluctant to sell their homes and then competing to buy a home. “As a result, many homeowners are deciding to stay put and continue accumulating capital gains. That’s keeping listings off the markets at a time when they are already in short supply,” said Klump in a statement.
