Via: Global

Vancouver, Calgary and Toronto continued to put space between home prices in those cities versus the rest of Canada in October, new figures released Monday show.

Home prices jumped more than 7 per cent nationally last month compared to October 2013, according to the latest Canadian Real Estate Association numbers – but that impressive gain was almost exclusively tied to price jumps in Canada’s big three housing markets.
“Another month, another familiar tune in the Canadian housing market—very strong activity in Vancouver, Calgary and Toronto, but much more subdued conditions most everywhere else” Robert Kavcic, an economist at Bank of Montreal, said.

The average price of a home sold through the Multiple Listing Service was $419,699 in October, up from $391,931 in the same month last year.

Big three

Prices jumped another 9.5 per cent in Calgary last month, while in Toronto, the average price tag on a home climbed 9.3 per cent year-on-year. Vancouver’s gain was a comparatively modest 6 per cent.

Still, many markets are posting flat to negative price gains – notably in seven markets of the 10 reporting centres east of Toronto, where average prices have dipped below year-ago levels.

MORE: What boom? Home prices under pressure everywhere east of Toronto

Kavcic said demographic shifts, like younger workers moving west to take jobs in faster growing regions such as Alberta, are creating “very challenging” market conditions for areas east of Ontario.

Still, even with rock-bottom interest rates, activity has cooled across the country with the exception of the big three, which show nearly no signs of slowing down.

Lost touch

That’s causing concern for some who fear a crash looms at some point, as prices in those cities climb far above average income levels required to support mortgages on those homes.

“The regional breakdown continues to reveal some troubling decoupling,” David Madani, an economist at Capital Economics in Toronto, said. “In these markets, home prices have lost touch with household incomes.”

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