VANCOUVER (NEWS 1130) – Our national real estate market is now in full-on boiling mode, according to a major Canadian bank.
The Bank of Montreal’s assessment comes as prices and sales set new records.
Sectors with high-earning jobs have recovered quickly, mortgage rates are at record lows, and there’s likely speculative activity in the market at this point, in the view of BMO senior economist Robert Kavcic.
Describing our country's real estate market as The Wild North, the Bank of Montreal says a perfect storm is being created for higher home prices. Listen @NEWS1130 as we hear that perspective from Senior Economist @RobKavcic
— Martin MacMahon (@martinmacmahon) March 16, 2021
He says this is all a perfect storm for higher home prices.
“If you look over the past year in Canada, prices are up 17 per cent from a year ago, but if you zoom in at the last six months, we’re up above 20 per cent. If you look at the last three months, we’re pushing gains of 30 or 40 per cent, if you annualize those out over the course over a full year,” he explains.
And Kavcic notes this is very much a national trend, with sales up by double-digits or more in all markets outside Quebec.
But where is this all going?
“If this is left unchecked, then at the rate we’re going right now, I think by the time we get into the second half of this year, prices are going to look quite a bit more stretched than they already are today,” Kavcic warns.
He hints at what could come — noting this is near records set in 2016/17 — a period where we saw various levels of government bring in cooling measures.
“At the high, we saw national price growth up just around 19 per cent year over year,” says Kavcic of that period. “That’s when we saw British Columbia and Ontario taking measures to address foreign investment, and we saw Ottawa really tightening up mortgage rules, especially in the uninsured space. Right now, if you look at shorter term price momentum, we’ve already pushed through what we were seeing in 2016/2017.”
Kavcic suspects within a month or two, on an annual basis, those price gains will push beyond what we saw during that period.