Canada's Housing Bubble

The housing boom rolls on, and the offerings vary greatly from one city to the next.

Apr 12, 2010 Tim Shufelt Financial Post

Canada’s housing boom continues to resonate, keeping realtors busy, prompting bidding wars among buyers and pushing prices skyward.

There has been a recent urgency to the real estate market as a few factors have compelled home buyers to act.

Of course, the greatest incentive has been bargain-basement mortgage interest rates. The Bank of Canada’s stimulus efforts to right the economy has kept borrowing costs at historical lows. Before interest rates start to normalize — the major banks have already nudged mortgage rates upward — buyers are locking into terms.

Also, new legislation taking effect April 19 will impose tighter conditions on mortgages, making anyone buying a home with less than a 20% down payment forced to qualify based on the posted rate for a five-year mortgage. First-time home buyers are moving now before they are priced out of the market.

Many buyers in British Columbia and Ontario are also trying to beat the arrival in July of the harmonized sales tax, which will add $2,500 to $3,000 to the average purchase price.

But the real estate business isn’t humming at the same pace across the country.

The average house in Canada now sells for $328,440, up 18% from last year. However, in Vancouver, the priciest housing market in the country, the average price rose to $584,435, a 20% jump from a year ago.

On the other hand, in Montreal the median price is $245,000, even after a 10% price increase.

In the Greater Toronto Area, the average sale price has hit $434,696.

Click here to get a taste of what half-a-million dollars, give or take, can buy in Canada’s biggest cities.