Change Language | Region*
American flag

*Products and services featured on our websites are only available to residents of the selected country.

Set your homepage

HomePersonal BankingWealth ManagementSmall BusinessCommercialCorporate & InstitutionalAbout BMO
<< Back to News Releases
BMO Spring Housing Affordability Report: Prices in Top Markets Still Rising, Affected by Millennial Demand & Strong Economy
  • Toronto and Vancouver see detached market softening, but condo and townhouse prices continue to climb  
  • Millennials influence markets beyond Toronto and Vancouver as they consider areas with greater affordability
  • BMO Economics expects continued high levels of home building and only moderate deceleration in sales

TORONTO, March 22, 2018 /CNW/ - As peak home buying season in Canada approaches, affordability remains very good, according to the BMO Spring Housing Affordability Report released today. The Toronto and Vancouver markets are the exception, with  softening in detached sales and prices, though condo prices continue to rise.

The perennially hot markets of Toronto and Vancouver are largely driven by the impact of millennial home buyers creating price increases in the condo and townhouse markets. These regions are also supported by strong economies, good demographics, and an abundance of high tech/high salary jobs.

"Millennial buyers and international migrants are cushioning the decline in detached home prices in the hottest markets," said Sal Guatieri, Senior Economist, BMO Capital Markets. "We expect millennials to also bolster other markets like Montreal and Ottawa, as those looking for better affordability consider options beyond Toronto and Vancouver."

Existing Home Sales (as of February 2018)

Region

Sales (% change)

Price (% change)


m/m

y/y

y-t-d 2018

y/y

y-t-d 2018

Canada

-6.5

-16.9

-10.8

-5.0

-2.3

Toronto

-8.2

-35.4

-30.4

-12.3

-9.6

Montreal

0.0

5.1

8.0

4.7

0.0

Ottawa

7.9

-3.1

-0.1

2.2

3.9

Winnipeg

-2.3

-12.4

-7.7

3.4

3.0

Halifax

-4.8

9.0

14.2

11.1

9.7

Vancouver

-15.8

-8.9

1.8

6.8

10.7

Calgary

-8.6

-14.6

-6.3

1.4

0.4

Edmonton

-3.8

-3.5

2.4

2.6

0.8

Regina

0.0

15.2

10.1

-0.7

-2.7

MLS Home Price Index (national)

6.9

7.3

Source: Canadian Real Estate Association

 

Mr. Guatieri also added that millennials' disproportionate influence on the market will likely start to wane only as we look ahead to next decade, similar to what we saw with the stagnation of baby boomer home buying in the 90s.

Beyond millennials, there are other factors affecting the market on a national scale, such as unemployment rates being among the lowest on record, coupled with the highest population growth seen in a quarter century. Interest rates are also still historically low, although more hikes are expected in 2018.

"It is likely we will see interest rates go up another 50 basis points this calendar year," said Mr. Guatieri. "Even these moderate increases will start to erode affordability for markets that haven't been much affected by tougher mortgage rules and other cooling measures."

"As homebuyers navigate the current market landscape, it is increasingly important that they are aware of all the factors that can affect affordability," said Martin Nel, Head, Personal and Small Business Banking, BMO Financial Group. "This goes beyond regional regulations, and those planning to buy a home should speak to a mortgage specialist about pre-approvals and stress-testing which takes into account changes that could happen beyond when they make a purchase."

Mr. Nel added that BMO has recently extended their mortgage pre-approval guarantee period to 130 days, the longest of any of Canada's major banks, to help prospective homebuyers with added convenience and additional time to finalize their plans.

Overall, this year will mark similar, though not as extreme, activity for the housing market. There will be still-high levels of home building, though no overbuilding in any market. But supply constraints will exist in Vancouver and Toronto, even for condos, as a result of lengthy building approval processes and zoning restrictions. There will be slower home price growth compared to last year, and a moderate decline in the level of home sales.

For more information on all stages of the home buying process, visit https://www.bmo.com/main/personal/mortgages/ or speak to a BMO mortgage specialist at your local branch.

About BMO Financial Group
Serving customers for 200 years and counting, BMO is a highly diversified financial services provider – the 8thlargest bank, by assets, in North America. With total assets of $728 billion as of January 31, 2018, and a team of diverse and highly engaged employees, BMO provides a broad range of personal and commercial banking, wealth management and investment banking products and services to more than 12 million customers and conducts business through three operating groups: Personal and Commercial Banking, BMO Wealth Management and BMO Capital Markets.

SOURCE BMO Financial Group

For further information: Media Contacts: Matthew Duffin, matthew.duffin@bmo.com, (416) 867-3996; Michelle Agnelo, michelle.agnelo@bmo.com, (416) 867-3996; Web: www.bmo.com, Twitter: @BMOmedia

Market Watch
As of
Last Change   
BMO TSX
BMO NYSE
TSX Comp
DJIA