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BMO Spring Housing Affordability Report: Montreal and Canada

House prices are healthy in most Canadian real estate markets, according to BMO's spring report on housing affordability released last week.

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House prices are healthy in most Canadian real estate markets, according to BMO’s spring report on housing affordability released last week. Toronto and Vancouver remain the exception, where condo prices have continued to rise despite cooling conditions in the detached home market.

Key findings of the report includes:

  • Detached homes see a drop in prices, while condo and townhouse prices continue to climb in Toronto and Vancouver. 
  • Millennials have bolstered sales in Montreal and Ottawa, which are considered more affordable markets.
  • Interest rates are expected to continue rising in 2018.

Many Canadian millennials have shifted their attention beyond perennially hot markets such as Toronto and Vancouver, which are also supported by strong economies and good employment opportunities, towards more affordable markets such as Montreal and Ottawa.

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

Canadians in prime first-time home-buying age (25 to 34), have contributed to the decrease in single family home sales, since they tend to prioritize the central location and convenience of condominiums.

BMO senior economist Sal Guatieri reported that millennials still hold a disproportionate influence on housing prices, but this effect is likely to wane over the next decade.

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.

Martin Nel Personal and Small Business Banking, BMO Financial Group

“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.

Other factors that affect the market on a national level include unemployment rate, which is at its historical lowest, and low interest rates.

BMO has recently extended the guarantee period of their mortgage pre-approvals to 130 days, in an effort to help prospective homebuyers shop secure a low rate while they shop for their dream homes.

Interest rates are likely to rise by another 50 basis points this calendar year. Even modest increases will affect affordability in markets already stressed by tougher mortgage rules and other cooling measures.

This year will mark a high level of home building, though not as extreme as 2017.

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


This article, BMO Spring Housing Affordability Report: Montreal and Canada, appeared first on Shupilov News

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