The Reminder is making its archives back to 2003 available on our website. Please note that, due to technical limitations, archive articles are presented without the usual formatting.
Canada's housing markets were hot in 2004 and prices will increase further in 2005 Ñ continuing the longest and most consistent residential housing bull market in over 30 years, according to the year-end national house price survey released by CENTURY 21 Canada. Don Lawby, President and Chief Operating Officer of Century 21 Canada Limited Partnership, says housing markets continue to be driven by low interest rates and a strong economy that is providing job stability, consumer confidence and an increasing number of home buyers. "I have never seen a market this strong, for so long, in so many markets across the country as I've seen in the past five years Ñ and I have been in the real estate industry for over 30 years," Lawby said. "Furthermore, I can see nothing on the horizon that will change market direction. Past downturns in the market were usually caused by significant inflation leading to large increases in interest rates and people finding they could no longer sustain their skyrocketing mortgage payments. But nothing remotely like this is in sight today." The CENTURY 21 survey compared prices of typical homes at year-end 2004 with year-end 1999 and found healthy price increases in all regions of the country. The highest price increases over the period were in the Ottawa communities of Gloucester, west Ottawa and Kincardine where increases were 92 per cent, 86 per cent and 67 per cent respectively. Other strong increases were 48 per cent and 53 per cent in Abbotsford and Richmond, B.C. respectively; 56 per cent in south central Calgary and 51 per cent in south east Edmonton; 62 per cent in North Kildonan and 59 percent in St. Vital South, both suburbs of Winnipeg; 51 per cent in Newcastle and 50 per cent in Muskoka, Ontario; 51 per cent in Riverview, New Brunswick; and 63 per cent in Dartmouth, Nova Scotia. Lawby believes price increases will continue across the country, although they may be smaller in some regions than in 2004. "Interest rates continue to drive people to the market. Later in the year, they may increase between a quarter and three quarters of a percentage point, but they will still be attractive," Lawby says. "The economy continues to prosper and grow. More and more people can demonstrate to lenders that their jobs are stable and that they can qualify for mortgage payments Ñ and so the number of buyers continues to increase." Lawby said the strong market for existing housing has coincided for the past three years with a record pace of new home construction. Most economists are forecasting new home construction in 2005 to be about 10 per cent lower than 2004 Ñ and this reduced supply of new homes will drive more purchasers to existing homes." Lawby says the strongest markets are in Alberta, British Columbia and Quebec, but the Prairies, Atlantic Canada and Ontario are also showing increases across the board. "It is no surprise that Alberta will have the strongest housing market in Canada in 2005. All parts of the energy sector continue to roar along, and additional job creation is stimulated by the tax structure and the increasing number of head offices locating in the province. Percentage increases in Edmonton will likely outpace Calgary, but only because prices in Edmonton start from a lower base than in Calgary." Lawby says the markets of B.C. and Quebec lagged behind when Alberta and Ontario took flight five years ago, but B.C. and Quebec are now making up for lost time. Lawby says that if the United States government opens its border to live cattle shipments from Canada Ñ as provincial agricultural ministers believe will occur despite the two new cases of mad cow disease (bovine spongiform encephalopathy, or BSE) in Alberta in 2005 Ñ the economies of all beef producing provinces would benefit, but the impact on the housing market would be felt most in Alberta, Saskatchewan and Manitoba. "Obviously, the greatest benefit would go to cattle producers and the industry that services them, but I think the economies of these provinces in general Ñ and, therefore, their housing markets Ñ would be stimulated by an extra shot of consumer confidence that the border opening would bring." In Ontario, Lawby says there is little evidence to suggest that the increased value of the Canadian dollar has hurt Ontario's manufacturing export industries enough to seriously impact the housing markets. "Ontario's economy is strong and diverse Ñ and all indications are that housing prices will increase through 2005, although perhaps moderately less than 2004." In Atlantic Canada, housing markets in all the major cities, including Halifax, St. John's, Fredericton and Charlottetown, will continue to see increases.
