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As Toronto Slows Down, Canadian housing is once again driving our economy even
This shorter read this week basically brings up the latest news in the national real estate market for October. On our social media feeds, we tend to share monthly reports solely for Ottawa, but that is not the case here!
In a real estate market where Vancouver and especially Toronto are so dominant and expensive, housing sales in the country took a breather as activity in Toronto pulled back, but continued strength in the western provinces highlights a sustained recovery at the national level.
Home sales mostly remained the same in October, after seven straight months of gains, according to data released last week by the Canadian Real Estate Association. Toronto was a major drag, posting a 2.9% decline, the biggest drop since February. Still, renewed momentum in Vancouver and Calgary were sources of strength, with sales growing 5.9% and 2.1% respectively. The Ottawa market continued to expand at a moderate pace, while Montreal was flat.
Residential housing has made a comeback this year as borrowing costs fell and buyers adjusted to tighter mortgage rules introduced at the beginning of 2018. With markets also adapting to the impact of taxes on foreign buyers in Vancouver and Toronto, Canadian real estate activity has climbed back above its 10-year average and is contributing to economic growth.
“The solid results simply drum home the point that the housing sector has returned to the status of a growth driver, rather than the growth dimmer it had been over the past two years,” Doug Porter, chief economist at Bank of Montreal, said in a note to clients. “The related pick-up in household borrowing is a key reason that the Bank of Canada has been a bystander to the global rate-cut parade.”
Benchmark prices also continued their recovery, rising 1.8% from a year earlier, with a 0.6% gain on the month. Though Vancouver, Calgary and other western cities have lower prices than a year ago, central Canadian markets are tightening. Toronto’s prices are up 5.6%, while Montreal’s rose 7.5%. Prices in the capital city of Ottawa are up 10.3%.
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