The 10 Year Canadian Real Estate Boom
One would think hearing the horrors of the United States real estate market and the struggles that it is in that it would translate to our cousins north of the border. However, Canadian real estate is still holding it’s own and has just completed a decade of prosperity that has been unrivaled in it’s past.
Prices of resale homes from 1997 to 2007 increased by 78 per cent for a 5.9 per cent compounded annual rate of return, according to the real estate firm. Unit sales were also 61 per cent higher in 2007 over 1997.
“The Canadian real estate market has surprised a lot of people, especially given the challenges we’ve faced from a high-tech meltdown, the 9/11 crisis, SARS and a credit crunch south of the border,” says ReMax spokeperson Christine Martysiewicz. “Over the past 10 years, real estate has shown incredible resilience.”
The run-up in prices is the longest sustained increase in house prices in recent history, the realtor says. via TheStar.com
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Comment by Don Johnson on 22 February 2008:
Interesting. There was a story in our local paper, the Victoria Times-Colonist today that referenced the same report.
Our prices here have exceeded the national average making Victoria one of the most expensive cities in Canada in which to live.
I noticed your other post referencing restrictive zoning coming into play in the price of real estate. I believe that is one of the factors at play in Victoria (and British Columbia) real estate generally running ahead of the rest of the country. We had the misfortune of some socialist governments a few years ago. They put in place a province-wide restriction on development called the Agricultural Land Reserve. That forces the development into marginal land (rocky, steep, costly to develop) and into redevelopment of existing residential stock (i.e., increasing density, high rises, etc.). In addition, in Victoria we have a limited supply anyway because we are on the end of Vancouver Island with a steep mountain range cutting us off from the rest of the Island … result: one of the most expensive cities in Canada in which to live.
Regards
Don Johnson
Jer 33.3
Comment by Jim on 25 April 2008:
Well it now seems consensus opinion that the Boom is over in Canada, with even hot western markets seeing large declines in real estate activity.
http://cnews.canoe.ca/CNEWS/Canada/2008/04/17/5316961-cp.html
Saskatoon has likely peaked, now that a slumping Edmonton real estate market, with higher average wages (I’ve heard $85,000 per household in Edmonton versus only $70,000 per household in Saskatoon) has cheaper housing in Edmonton than Saskatoon. Also, there are decreased sales in Saskatoon, and increased available listings in Saskatoon. There may still be diamonds in the rough, e.g. Regina, where houses are about $100,000 cheaper than Saskatoon, but as a Canada wide boom, I’d agree it is over, with the last few strong markets, Calgary, Edmonton having peaked, and Saskatoon now exceeding markets with stronger wages and stronger fundamentals.
The one hold back, might be the high rates of crime, including violent crime in Saskatoon and Regina, which while locallized to particular areas of the city, are the highest in the country, http://www.thebench.ca, and mean real estate in the non-crime ridden areas is even more expensive. A big deal for Saskatoon, as the average including these high crime areas is already more expensive than housing in Edmonton as a whole.