Canada’s condo market has set off some alarms, but everyone is busy watching the dumpster fire down the street. BMO senior economist Robert Kavcic highlighted condo price growth last month. Price growth didn’t just hit a multi-year high for annual growth. Growth over the past 3 months showed one of the fastest price accelerations in history. It’s just being dwarfed by price growth in the rest of the market, making condos look tame.
Canadian Condo Prices Are Growing At The Fastest Rate Since 2018
Canadian condo prices have been ripping higher, while attracting very little attention. Condo prices increased 8.4% in April, when compared to the same month a year before. This was the fastest rate of growth since mid-2018, a noteworthy event on its own. What most are missing is how quickly this market accelerated in just the past few months.
BMO annualized the growth to emphasize the trend, using the 3-month trend. Annualized growth for this period was at 25% last month, when seasonally adjusted. This is the fastest ramp-up since the 2016-2017 run. It just looks tame compared to the rest of the market, led by detached homes.
No One Is Noticing It Because The Rest of The Market Is Absurd
“These gains look almost pedestrian when stacked up against astronomical gains in the single-detached and cottage markets.” said Kavcic. Adding “But, otherwise, the condo market would be writing a headline-grabbing story of its own.”
General home price growth has been cartoonishly large recently, but dragged by condos. The composite of all home types grew by 23.12% in April, when compared to a year ago. Makes that 8.5% barely noticeable, despite being almost 4x income growth.
It’s not just the base effect from a year-over-year skew either. The 3-month annualized growth for detached homes reached above 40% in April. Both segments are seeing price growth at obscene rates, but 25% growth seems reasonable against 40%. It’s very, very fast though.
Other countries have enacted cooling measures at less than 10% growth. Canada’s “most affordable” segment of housing is rising at 25% annualized growth, and it’s not even on most people’s radar.
“We continue to believe that Canada’s largest urban centres will come back strongly, and this market should continue to benefit in the near term…” he said.
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