While most of the Canadian housing market has cooled significantly, real estate is still hot in Calgary, Toronto, and Vancouver.
In an report released on October 10, BMO Economics gave several explanations for why these three cities have continued to soar while the rest of the country posted lacklustre results.
First of all, the “hot three” have experienced higher population growth, increasing by a combined 23% over the last decade compared to the 11% growth rate recorded nationally. There are also more prime buyers in these cities, with the number of 30-to-39 year olds outpacing the general population. Then there is the fact that Calgary, Toronto, and Vancouver have all posted higher than average job gains. Finally, low mortgage rates have made it easier for buyers to deal with higher costs while foreign wealth has helped to drive up prices in high-end neighbourhoods in Vancouver and Toronto.
However, BMO predicts that worsening affordability will cause all three markets to cool when borrowing costs eventually increase. "Pricey Vancouver and Toronto are likely to face moderate price declines, while still-affordable Calgary could get off more lightly," comments Sal Guatieri, senior economist at BMO Capital Markets.