November numbers heat up housing bubble talk

Wednesday, 16 December 2009


With the Canadian Real Estate Association's release of November housing numbers Tuesday, talk of a bubble is heating up among economists and industry professionals.

The CREA report said existing homes sales in November increased by a whooping 73 per cent compared to a year ago and prices rose almost 20 per cent.

"We're on the bubble of a bubble," Bank of Montreal economist Doug Porter told The National Post, sharing his worry about a potential surge of home sales before the central bank raises rates and the new harmonized sales tax is introduced in B.C. and Ontario. "We could see a bit of a buying frenzy coming this spring...followed by a "pop" in 2011?"

But despite continued fears that skyrocketing numbers signal the formation of an asset bubble, some insiders said the dramatic rise is due to how low the market was at this time last year. The number of listings also went up by five per cent from October to November, which is expected to help ease price increases.

"The numbers look huge, but you are coming off such a bad year," TD Securities economics strategist Millan Mulraine told The Globe and Mail. "You're seeing big numbers in the recovery, but the pace and momentum has eased. You could definitely say it's not driving as fast as it was a few months ago."

Another argument against a bubble came from Genworth Financial Canada president Peter Vukanovich, who told The National Post that because more consumers have been switching into fixed rate mortgage products, they will be less exposed to expected interest rate hikes.


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Moving up: ‘Aspirational homes' still affordable

Virginia Galt
The Globe and Mail

Wednesday, September 23, 2009

Home prices are rising again, but the cost of moving up to that “aspirational home” in Canada is still affordable because of low mortgage interest rates, real estate firm Coldwell Banker said Wednesday. Transferring to Singapore? Not so affordable.

In its annual survey comparing the prices of 2,200-square-foot, four-bedroom houses in 345 North American markets – homes suitable for “middle-management corporate transferees” – Coldwell Banker found that Vancouver remains the most expensive market in Canada, and the 10th most expensive in North America, for corporate up-and-comers.

The average 2009 list price of Vancouver homes in the surveyed category was $1.26-million.

Coldwell Banker also looked at housing prices outside of North America and found that, “compared to many major markets throughout the world, Canadian real estate looks like a bargain,” John Geha, president of Coldwell Banker Canadian operations, said in releasing the survey results.

The study looked at single family homes (with 2 1/2 bathrooms) of the type “usually purchased by move-up buyers experiencing lifestyle changes,” Mr. Geha said.

“Despite record-breaking prices in many of Canada's major markets, these homes are selling, as buyers take advantage of today's historically low interest rates,” he said. “These move-up buyers have been a critical component in our resurgent real estate market, and will continue to play a major role in Canada's recovering economy.”

The cost of “moving up,” by city

Vancouver: $1.26-million

Toronto: $824,347

Victoria: $663,000

Burnaby, B.C.: $657,000

Fort McMurray, Alta.: $638,000

Calgary: $525,525

Scarborough, Ont.: $481,750

Oakville, Ont.: $469,500

Montreal: $469,250

Burlington, Ont.: $464,025

Kelowna, B.C.: $444,475

Mississauga, Ont.: $443,333

Edmonton: $432,250

Waterloo, Ont.: $400,833

Winnipeg: $390,368

Saskatoon: $381,975

Where the bargains are (under $300,000)

Charlottetown: $158,667

Brantford, Ont.: $239,750

Lindsay, Ont.: $243,100

Windsor, Ont.: $244,000

Moncton: $276,843

Halifax: $277,302

Collingwood, Ont.: $290,000

Barrie, Ont.: $295,000

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