"The markets are definitely cooling in Canada," said Derek Holt, assistant chief economist at Royal Bank of Canada. "I think the days of huge price increases are gone."
Indeed, if interest rates edge down, as many expect, and wages rise, housing affordability will improve in most of the country in 2007 -- a dramatic reversal from years of climbing costs.
"In most of the country we are going to see what is very close to a balanced market," said Bob Dugan, chief economist with Canada Mortgage and Housing Corp. In every market but Calgary, Mr. Dugan said he expects price increases to stay in the low single digits, something not seen since the real estate market began its record-breaking streak five years ago.
Since then, the housing market in most parts of the country has been on a tear, with record sales volumes and price gains that have hit triple digits over five years in some prime markets.
A new study released yesterday by Century 21 Real Estate Corp. shows that the selling price of a typical house in many popular neighbourhoods in Canada has more than doubled during those five years.
The price of a typical bungalow in Edmonton has risen 144 per cent during that period, while a similar house in Calgary has gone up 128 per cent and the price of one in Vernon, B.C., rose 129 per cent.
In Ontario, a typical home in the Beaches neighbourhood is up 106 per cent since 2001. By comparison, a detached house in Ottawa rose 23 per cent in value.
"We've seen such record numbers. We're are going to see a slowdown, but its not going to be a big fall," said Don Lawby, president of Century 21 in Canada.
Even in Alberta, where the average price of an existing home is expected to rise by about 30 per cent this year, CMHC anticipates the pace of those increases will ease significantly to about 12.6 per cent next year. "It's quite a slowing of price growth," Mr. Dugan said.
The Canadian Real Estate Association puts price growth in Alberta at 9.9 per cent next year, with all provinces east of Manitoba at 4 per cent or less.
Most expect this year's sales numbers to be almost identical to last year's record pace. "It's going to be a photo finish," said Gregory Clump, the association's chief economist.
The most recent CMHC forecast expects the national average price of an existing home will rise 5.7 per cent next year, down from 11.6 per cent. That would be the smallest rise in the national average since 2001, when prices rose 4.7 per cent across the country. It also expects sales volumes of existing homes to decline by more than 4 per cent.
Mr. Lawby said the cooling of hot markets such as Calgary and Vancouver will allow buyers to get in without the stress of bidding wars. "It's a great time to look for a home," he said.
For his part, Mr. Holt at RBC said he has his fingers crossed that Western markets will experience what he calls a "near-term hiccup," rather than the kind of major correction now taking place in some regions of the United States.
Mr. Holt said there is some risk of falling prices in B.C and Alberta next year, but he expects any correction will kick off yet another wave of buying.
Five years of growth
Housing prices across the country have risen dramatically in recent years, with some markets seeing triple-digit gains. Here's a look at a typical house in some of the country's hottest markets.
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Toronto Beaches
Typical home: Semi-detached two-storey
2001 price: $220,500
Current price: $454,500
Five-year change: 106%
Six-month change: 6%
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Edmonton Northeast
Typical home: Bungalow
2001 price: $123,000
Current price: $300,000
Five-year change: 144%
Six-month change: 36%
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Vernon, B.C.
Typical home: Bungalow
2001 price: $155,000
Current price: $355,000
Five-year change: 129%
Six-month change: 0%
SOURCE: CENTURY 21
Toronto and Ontario real estate prices
![Toronto and Ontario real estate prices]()
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