Despite a tepid slowdown in the first couple of months of the COVID-19 public health crisis, both cities have been soaring ever since.
If the HPEI is between 0.95 and 1.00, a bubble will potentially form and appear in yellow.
Before the pandemic, the Toronto housing market’s HPEI was above 1.00, in the red zone, while Vancouver was in green territory.
Although the Montreal housing sector has witnessed significant price growth in the previous five years, the BoC slapped an “exuberant” label on the Quebec municipality.
Strong demand fundamentals, shifting preferences for more space, and limited supply of single-family homes have together contributed to rapid house price growth,” the institution wrote in its analytical note.
Is this an accurate representation of the Canadian real estate market? Many homebuyers would suggest that it is not, pointing to the frothy valuations in detached, semi-detached, townhome and condominium units, particularly over the last 18 months.
According to the Toronto Regional Real Estate Board , residential property sales skyrocketed 28 per cent in 2021, buoyed by record demand and notably low inventories.
These factors supported not only a continuation in demand for ground-oriented homes, but also a resurgence in the condo segment as well,” said TRREB President Kevin Crigger in a news release.
Because of how tight the Metro Vancouver market is, the benchmark price of a detached home is more than $1.9 million, while an attached home is selling for about $1 million.
With low interest rates, increased household savings, more flexible work arrangements, and higher home prices than ever before, Metro Vancouverites, in record numbers, are assessing their housing needs and options,” noted Keith Stewart a Real Estate Board of Greater Vancouver economist, in a statement.
Supply relief does not appear to be on the horizon, warns Canadian Mortgage and Housing Corporation .
The next several months should be an interesting time in the Canadian real estate market amid rising interest rates, tighter mortgage lending standards, and swelling price inflation nationwide.
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