British Columbia – Market springing back to life
The repair of poor affordability levels in British Columbia accelerated significantly in the first quarter of this year, with RBC’s affordability measures dropping between 3.4 and 7.4 percentage points. For most housing types, the cumulative declines over the past year have been the sharpest since 1991, which has helped to set the province’s housing market onto a healing course in recent months.
Sales of existing homes have picked up vigorously from historical lows during the
November-January period, and prices have shown hints of leveling off after generally falling since winter last year. At the same time, the pace of homes being put up for sale has slowed onsiderably, which has contributed to rebalance the market. With construction of new units still extremely weak and, therefore, bringing fewer homes onto the market, better balanced conditions are likely to persist and put a floor under prices in coming months.
Alberta – Affordability restored
Declining mortgage rates and sinking home prices throughout 2008 and early 2009 worked their magic towards restoring home ownership affordability in Alberta. Following record quarterly declines in the first quarter of this year – ranging from 3.3 to 6.1 percentage points – RBC’s affordability measures for the province were broadly back to their long-term averages. This has sparked renewed interest from buyers, who have made a welcome return to the market recently. Sales of existing homes have rebounded smartly this spring from their lowest point at the turn of
the year since 1996. Market conditions have tightened as a result of the effect of stronger buying interest and more restraint on the part of sellers. With less supply hitting the market – housing starts have been at a 14-year low since the start of this year – and an economic backdrop that is expected to show increasing signs of recovery, Alberta’s housing market is likely at the point of turning the corner.
Saskatchewan – Finding balance
RBC’s affordability measures for Saskatchewan declined again in the first quarter – between 2.5 and 3.3 percentage points – making the year-over-year drop among the largest on record for the province. Saskatchewan’s housing market now appears to be negotiating its way quite deftly towards a more sustainable level of activity, putting to rest earlier concerns that it might crash following the 2006- early 2008 boom. Moderately stronger sales of existing homes this spring – after bottoming at the start of this year at still-elevated levels – and a slower pace of properties being put up for sale have restored some balance into the market. This is further helped by considerably weaker construction of new housing units in the first four months of 2009, which will bring fewer new units onto the market. The return to balanced market conditions should help stabilize prices in the period ahead.
Manitoba – Market shows continued resilience
Supported by relatively favorable home ownership affordability levels, Manitoba’s housing market continues to be among the most resilient in the country. RBC’s affordability measures for the province fell again in the first quarter – by 1.2 to 3.6 percentage points – to levels mostly in line with long-term averages.
The provincial market has put up strong resistance to the downturn, as sales of existing homes dropped the least among the provinces from the most recent peak and prices withstood the downward pressure. While down significantly from levels a year ago, the sales-to-new listings ratio is still at levels consistent with a sellers’ market (albeit barely so). A relatively robust conomy – Manitoba is forecast to be one of only three provinces to show positive growth in 2009 – steady gains in the population and improved affordability should support housing demand in the period ahead.
Ontario – Not so bleak anymore
Although persisting economic uncertainty is still hampering many Ontario’s communities, recent developments have provided encouraging signs that the province’s housing market, overall, has seen the worst of the cyclical correction. Spring resale figures have shown a surprising gush of activity in the province, retracing much of the sharp declines during the fall and early winter. Average prices for existing homes have started to rise again in recent months, climbing back to where they were mid 2008. Much of this resurgence in the overall Ontario market is owed
to greater affordability following a year-long period of repair. By the first quarter of this year, some of RBC’s affordability measures (e.g., for detached bungalows and condominiums) had even dropped below long-term averages. Nonetheless, for some of the hard hit areas of the province, such as Windsor, St. Catharines and London the healing process might be long and difficult.
Quebec – Was it just a temporary blip?
If the sharp rebound in resale activity during the spring truly marks the end of the housing downturn in Quebec, the province will have done surprisingly well in the context of severe market corrections elsewhere on the continent. Quebec’s market had been among the last in Canada to yield to the general slump and now appears to be convalescing right alongside others. During this blip of a few months, prices barely missed a beat, generally staying their upward course (albeit at a slower pace). The fairly quick recovery in Quebec parallels the short time that
has been needed to restore home ownership affordability, largely because of its relatively good standing at the onset of the downturn. RBC’s affordability measures dropped between 2.1 and 3.6 percentage points in the first quarter of this year and are now below long-term averages across all housing types, indicating that home ownership has become more accessible than it has generally been the case since the mid-1980s.
Atlantic – Little affected by the housing storm
Generally favorable affordability levels in Atlantic Canada have given the region some protection against the housing storm. RBC’s affordability measures declined again in the first quarter between 2.1 and 3.5 percentage points, representing the third drop in the past year for all housing types. As greater affordability sparked the interest of new buyers, resale activity picked up in the spring after moderating during the winter months. By and large, home prices sailed through the storm mostly unscathed, with very few declines reported since last fall. St. John’s continues to be Canada’s housing hot spot, showing significant price appreciation during the past year, although the pace of increase has cooled in recent months. Despite some volatility, other markets such as Halifax, Saint John and Charlottetown are also sustaining upward price momentum.