Even as experts argue that the country is experiencing a housing bubble, there are still some markets in the country that are wondering where all of this talk is coming from.
Image: righto / Flickr
For instance, in Windsor, Ontario, there are three-bedroom houses going for as low as $30,000. (Across the river in Detroit, it is even cheaper. That city’s median home price was as low as $7,500 in early 2009.) Even places like Calgary are still seeing price increases that are relatively muted. In January 2010, prices only increased 6% from the bottom of the market in January 2009. And in Edmonton, prices are still falling.
In fact, nationally, the only places that seem to be seeing price increases at a bubble-like rate are Vancouver, Victoria and Toronto. The Atlantic provinces have seen huge leaps in prices, but these markets are rising from low prices, and are still very affordable. It is only in Vancouver, Victoria and Toronto that price increases have hit close to 20% from their weakest point in the recession, and are also some of the most expensive markets in the country.
But even in these markets, some of the price increase may be due to the introduction of the HST in June 2010. Vancouver is currently putting on one of the largest events on the planet. Heleen has pointed out that Baby Boomers looking for a fiscal safe haven might be fuelling price increases in Victoria.
And even at the basic city level, average price house increases hide huge disparities. Vancouver, Toronto and Montreal have large populations of rich investors who were largely unaffected by the recession. This group has noticed that with low interest rates and potentially motivated sellers, now is the time to jump into the market. With this group fuelling sales, the average house price would naturally rise. In fact, the number of resales in Ontario dropped in January 2010 from the month previous, suggesting that although the higher end of the market is doing well, the lower end is not as strong.
In other words, don’t listen to the doom-mongers too much. Every market is different, and it is clear that not every market – and perhaps none of them – is suffering from irrational price increases. In fact, some people are snatching up the cheap homes in Windsor right now in expectation of future job and infrastructure improvements. Even in this supposed bubble, there are deals to be had.
Nelson Goulart
Broker of Record with Signature Service GMAC Real Estate
www.ssgmac.ca
