After reaching overheated territory earlier this year, risks to the country’s housing market are now easing as prices and activity moderate.
That’s the assessment from RBC Economics’ latest Housing Health Check, which noted that “still-solid” demand—particularly in the resale market—and low inventories are keeping the odds of a price collapse low.
Despite prices easing over the summer, the sharp run-up since last year has worsened affordability, with the situation remaining “severe” in Vancouver and Toronto, while the issue is becoming “more problematic” in Montreal.
Here’s an assessment of how Canada’s four largest housing markets are faring:
Activity in Canada’s largest housing market has been slowing since the spring. A drop in listings has kept the market “extremely tight” and prices under upwards pressure, RBC noted.
The city saw a spike in activity over the winter that has since been partly reversed. Despite lower sales, demand remains high for limited inventory, which has maintained support for prices. “Despite improving since late–2018, housing affordability is exceedingly poor and a major source of vulnerability,” RBC said.
The market saw a moderation in the existing home market to more sustainable levels over the summer. Despite the slower pace of price appreciation, RBC sees little risk of a sharp decline in prices as it remains a seller’s market. “Affordability is a moderate but growing strain. Elevated rental apartment construction warrants close monitoring.”
Calgary’s housing market experienced a “solid” recovery over the past year due to a drop in inventory of existing and newly built homes, which in turn led to a rise in prices. “Demand–supply conditions are in fact the tightest they’ve been in years, which points to further price gains in the near term,” the report noted.