Canadian homebuyers remain undaunted in 2013, as housing sales and average price approach five-year high… Major residential real estate markets poised for further growth in 2014
Laval, QC (December 11, 2013) — Canadian consumers remained remarkably steadfast in their determination to achieve homeownership in 2013, fuelling residential real estate sales and average price nationally to a five-year high, despite a spotty regional performance. Improved economic performance on both a national and global stage, combined with historically low interest rates and rising consumer confidence, should spark greater strength in 2014, with housing sales and values expected to further appreciate, according to a report released today by Canadian Housing Market.
The Canadian Housing Market Outlook 2014 examined trends and developments in 25 major markets across the country. The report found that the number of homes sold is expected to match or exceed 2012 levels in almost two-thirds of markets (15/25) in 2013, led by strong activity in British Columbia, including Vancouver (up 10 per cent) and Kelowna (10 per cent). Quebec markets are expected to soften somewhat from year-ago levels, with Greater Montreal and Quebec City poised to record a nine percent and 12 per cent decline in sales respectively. The province experienced greater impact from stricter lending regulations and saw confidence hampered by labour challenges and weaker economic growth in 2013. Ninety-two per cent (23/25) of markets are set to experience average price increases by year-end 2013, with Hamilton-Burlington the country’s frontrunner at 7.5 per cent, followed by Barrie and District at seven per cent, Calgary and St. John’s at six per cent, and Greater Vancouver, Winnipeg and the Greater Toronto Area at five per cent. Montreal and Quebec City are anticipated to post modest average price gains of two and four per cent respectively.
The forecast for 2014 shows the upward trend gaining momentum, with values expected to climb yet again in 92 per cent (23/25) of centres, led by Greater Toronto at six per cent. Montreal should see average price plateau, while Quebec City is expected to mark a slight one per cent contraction. Strength and stability are forecast to characterize Canadian real estate in 2014, with sales estimates on par or above year-ago levels in all markets examined, led by Kelowna (10 per cent) and Calgary (nine per cent). The Quebec markets are expected to resume a growth trajectory in unit sales in 2014, both at two per cent.
Nationally, an estimated 466,000 homes will change hands in 2013, an increase of three per cent over the 453,372 sales recorded in 2012. Canadian home sales are expected to climb two per cent to 475,000 units by year-end 2014. The average price of a Canadian home is forecast to appreciate four per cent to $380,000 in 2013, up from $363,740 in 2012. Values are expected to continue to escalate in 2014, rising three per cent to $390,000 by year end.
“Housing markets proved incredibly resilient in 2013, particularly in light of the greater disparity in year-over-year performance that existed earlier in the year,” says Sylvain Dansereau, Executive Vice President. “While activity proved weaker overall in Quebec, a more positive picture should emerge next year. Quebecers and Canadians overall have demonstrated a long-term mindset that bodes well for stability. Yet, they also value progress, and we expect that to translate again in 2014. Equity gains should continue to result in tangible leaps to larger homes or better neighbourhoods, as well as a growing wave of renovation and revitalization. Gains in equity markets may also serve to bolster activity, as paper wealth is converted to material wealth. We anticipate improved momentum going forward.”
Regional disparities surfaced early in 2013, according to the Report, and were evident throughout the year. Alberta started the year with a bang, with both major markets bucking the national downward trending in sales. Homebuying activity in British Columbia, Saskatchewan, Manitoba, and Ontario kicked into high gear in July, with most centres expected to move ahead of 2012 levels by year end, led by Greater Vancouver, Kelowna, Victoria (six per cent), Windsor-Essex (six per cent), Edmonton (five per cent) and Hamilton-Burlington (five per cent). Yet, performance in Quebec and Atlantic Canada is forecast to fall short of 2012 levels. More consistent performance is expected in 2014, especially given economic projections for the East Coast and Quebec. Both regions should rebound in the new year, led by Halifax-Dartmouth (five per cent), Moncton (three per cent), Greater Montreal (two per cent) and Quebec City (two per cent).
“Inventory played a key role in keeping housing markets at an equilibrium in 2013 with supply largely meeting demand throughout the year,” says Elton Ash, Regional Executive Vice President.” The anticipated run-up in inventory failed to materialize in most major centres. Prices remained healthy as a result, with steady upward momentum noted, particularly in the latter half of the year. The trend is forecast to continue, with average price appreciation expected to break existing records in 2014.”
Although there are several factors that are expected to contribute to rising housing values on a national basis, one of the most pressing is build out. Nowhere is that more obvious than in Vancouver, where the mountains and the ocean have prevented further growth, and the Greater Toronto Area, where the greenbelt has stymied future development. As such, the availability of low-rise homes relative to the population is expected to contract, placing further pressure on prices. Vertical growth and its affordable price point is representative of the future.
“We are seeing an increasing focus on higher density developments across the country,” says Dansereau. “While the trend is expected to gain traction in most major centres, we anticipate a softening in Quebec’s condominium segment, until the current oversupply is absorbed.”
On the whole, solid underpinnings continue to support healthy levels of real estate activity from coast to coast. Buyers appear to be realistic in their pursuits, and after several rounds of mortgage tightening, many are coming to the table better qualified, with larger downpayments and readjusted expectations. Imposed restrictions have had the desired effect. A sound framework is now in place to support steady and sustainable growth over the next several years. Existing inventory levels remain crucial to Canadian housing markets moving forward. The tightening currently demonstrated at entry-level price points as more first-time buyers make their way back into the market could translate into further price hikes down the road.
“The housing outlook remains healthy and positive,” says Gurinder Sandhu, Executive Vice President, Regional Director, RE/MAX Ontario-Atlantic Canada. “Continued growth and expansion should characterize most residential markets in the year ahead. The appeal of residential real estate continues to resonate with Canadians, as a relatively low-risk, tangible asset that serves multiple purposes shelter, investment, and retirement fund rolled into one.”
Forward Looking Statements This press release includes “forward looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “anticipate”, “believe”, “intend”, “expect”, “estimate”, “plan”, “outlook”, “poised,” “should” and “project” and other similar words and expressions that predict or indicate future events or trends or that are not statements of historical matters. Forward looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward looking statements. Such risks include, without limitation, those described in the sections “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operation in Holdings Inc.’s registration statement on Form S-1 filed with the United States Securities and Exchange Commission (“SEC”) and (1) changes in business and economic activity in general, (2) changes in the real estate market, including changes due to interest rates and availability of financing, and (3) changes in laws and regulations that may affect our business or the real estate market. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Except as required by law, Holdings Inc. does not intend, and undertakes no duty, to update this information to reflect future events or circumstances. Investors are referred to in Holding Inc.’s registration statement on Form S-1 and subsequent reports filed with the SEC.
Data Source: Historical data is sourced from CREA or Local Real Estate Boards. Estimates and forecasts are based on the opinion of independent broker/owners and affiliates.