2015 Spring Market Trends Report

Low inventory in Vancouver and Toronto continue to drive prices as buyers find themselves in competition over the low supply of single-family homes.The average residential sale price in Toronto and Vancouver at the end of the first quarter grew 8 per cent and 7 per cent, rising to $594,827 and $874,869, respectively. In both markets, first-time buyers find themselves in competition with downsizers and investors with more resources to outbid. Condominiums are the only affordable option for many local residents looking to enter the market. Condominium buyers are attracted to more than just affordability: Buyers— especially Millennials—are attracted to a more urban, car-free lifestyle in the heart of the city. Vancouver’s condominium inventory is also low, although higher than freehold properties.
The 2015 average residential sale price in Toronto and Vancouver was projected to increase by 4 per cent and 3 per cent, respectively.The 2015 price projection for Toronto has been revised to 7 per cent and 6 per cent in Vancouver, resulting in a revised national forecast of 3 per cent.
Regions outside of Vancouver and Toronto, such as Victoria, Hamilton-Burlington and Barrie have all reported an increase in spillover effect from Canada’s highest priced regions.The three regions posted first quarter price gains of 2 per cent, 8 per cent and 6 per cent, respectively.
Another interesting trend that was reported in many Canadian housing markets such as Winnipeg, Saskatoon and Halifax is the increase of single buyers.This is also evident in Toronto’s condo market.Typically, these buyers are young and motivated to get into the property market and create the lifestyle they are working hard to establish.This marks a shift in life milestones as previously home ownership often came after marriage.
As RE/MAX commented in December 2014, oil price volatility takes considerable time to show effect in house pricing. Calgary posted a modest first quarter 2 per cent decline in average residential sale price compared to the same quarter in 2014, while Edmonton posted a 2 per cent increase. However, market activity is down in both Calgary and Edmonton, while inventory is high.
Not all provinces have been negatively impacted by lower oil prices. Provinces with minor exposure to the oil industry and can benefit from the low cost of energy are poised to perform well, most notably Ontario and British Columbia. In addition, the average Canadian has more money in their pocket by saving at the pump.
Another oil economy, St. John’s, witnessed a 6 per cent year-over-year increase in sales in the first quarter of 2015 compared to the same quarter last year. However, the average residential sale price has decreased 4 per cent over the same period. In contrast, St. John’s upper-end market is proving resilient as activity remains healthy and quality listings are in demand.
In Ottawa, residential sales were up 2 per cent year-over-year, while the average residential sale price rose 1 per cent. Since the federal election is not until the fall, the usual market pause that would result is not expected to impact the spring and summer buying season.
Canada’s housing market is expected to continue benefitting from record low interest rates for the remainder of the year motivating new buyers into the market and mitigating effects from modest economic growth and oil price volatility. Immigration will also continue to have a positive effect on both the Canadian economy as well as its housing markets. Canada is expected to welcome 260,000 to 285,000 new permanent residents in 2015.
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