There are four key reasons housing prices have soared in Vancouver and Toronto over the last two decades, according to a report released by RBC on Friday. And foreign investment is not one of them. The report estimated that since 1999, home prices in Toronto have increased 162 per cent in Vancouver and 140 per cent in Toronto. There have been many theories as to why this has happened, but according to RBC, there isn’t one singular factor to blame
About half of Canadian housing markets saw cooling sales in June, even red-hot Vancouver where low inventory is affecting the volume of activity. The Ottawa-based Canadian Real Estate Association, which represents about 100 boards across the country, said sales through the Multiple Listing Service system were down 0.9 per cent in June from May on a seasonally adjusted basis. Declines over the last two months have left sales 2.6 per cent below the record set in April. “While national sales activity remains strong, there are still significant differences in housing market trends across Canada,” said Cliff Iverson, president of CREA, in a statement. “While home sales activity and price growth are running strong in B.C. and Ontario, they remain subdued in other markets where homebuyers are cautious and uncertain about the outlook for their local economy.”
Tax revenue from B.C.’s sizzling housing market helped the province post a $730 million surplus during the last fiscal year, the province’s finance minister has confirmed. “It is clear that property transfer tax revenues are up,” said de Jong on Thursday in Victoria. In total the property transfer tax brought in $1.53 billion for the government, $605 million more than budgeted, said de Jong. That’s an increase of 44 per cent over the previous year, and it all went a long way toward helping the government table the $730 million surplus, he noted.
Canada Mortgage and Housing Corp. sees very limited speculation in the condominium industry in Toronto among builders, a situation unlike the 1980s when the market crashed. In a report out Tuesday, CMHC, the Crown corporation that guides Ottawa on housing policy, noted that 79 per cent of projects had reached pre-construction sales of 70 per cent. That level is considered key for bank financing and a guarantee that a project will come close to breaking even.
“Condo building activity in Toronto seems to be well managed. In spite of this encouraging information, future inventory management will be critical,” said Dana Senagama principal, market analysis, with CMHC.
Fort McMurray’s fire-ravaged housing market could see a resurgence as returning homeowners snap up empty rental units and the community undergoes largest home building boom in decades, Canada’s federal housing agency predicted.
Housing starts in the heartland of Canada’s oil industry could soar to 2,500 as large-scale efforts get under way to rebuild after wildfires swept through the region in May, Canada Mortgage and Housing Agency said, although much of the rebuilding isn’t likely to start until next year. “This is expected to be the highest new home construction activity Fort McMurray has seen in twenty years,” wrote market analysts Tim Gensey. The fires destroyed nearly 10 per cent of structures in Fort McMurray, almost 2,000 buildings, many of them homes. The rebuilding effort could do much to reverse the sagging fortunes of Fort McMurray’s housing market, which had suffered from the drop in oil prices that began in late 2014. In the months leading up to the fire, sales had plunged to half the five-year average while average resale prices in the first quarter were down 17 per cent from the same period two years earlier. Builders had started construction on just 13 new homes. The community’s rental vacancy rate had soared to nearly 30 per cent.
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Gavin is a media relations consultant and news junkie based out of Collingwood, Ontario.