Canada’s Condo Markets Are Making Huge Gains, That Will Get Bigger: BMO

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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  • Supply is the problem 3 years ago

    Supply is dismally low compared to demand. I always see all these “experts” talking about everything except supply. These “experts” have vested interest. They want to make sure that supply stays low, so they can benefit from skyrocketing home prices.

  • Smug Canadians 3 years ago

    I’m telling everyone I know, including my daughter; try to find a job in the US or in Europe. This country is done for those just starting out. Maybe, if you invest in another country for 10-20 years, you can afford to come back and ‘maybe’ buy something. Isn’t that sad? What the F*&K has happened to our once great country?????????????????? That is our new reality!

    • Oops 3 years ago

      The housing bubble is just a symptom of a greater problem.

      US remains quite industrious and still remains on the frontier for high tech industry via its military and academic fusion coupled with its vast capital markets. It’s folly to compare the two nations.

      But, other, smaller nations like Finland have also produced quality home-grown high tech companies in telecom infrastructure. The Germans of course have their own industrial powerhouses used in automation equipment and rail.

      I’m afraid Canada will have none of these going forward. Like Britain, the Anglo-Saxons will follow the hyper-financialization model and just become hollow economies. Trying to build wealth in such a country without taking on large mortgage debt and/or starting out with parental wealth is going to increasingly become a borderline Sisyphean endeavor (especially with brutal taxation). Canadians just don’t get that they are crippling their own country’s future prospects by continuing to gouge on debt and rely on immigration instead of increasing productivity thru tech advancements.

      Your daughter can probably go to a smaller US city and still own a home without being a slave if she is employed in the white collar industries of software, high finance and perhaps some forms of engineering or a corporate role (maybe). Big city living in the US is just another rat race albeit with more income.

      Europe I’m not a big fan of except it is a nice tourist destination. Maybe a nice place to retire too.

    • Ashley 3 years ago

      Agreed, there is too much struggle to get a comfortable life for recent grads and immigrants, not worth the effort for what Canada has to offer. Better job opportunities in US, much cheaper daily living and higher standard of living.

    • Kris 3 years ago

      100% agree. This is all going to lead to societal problems which will continue to get worse over time. We will likely see a mass brain drain and our Politicrats seem to think they can gloss over that by increasing immigration. Problem is that the type of immigrants we need are also needed by other countries that present better opportunities and a better future for their children. Now that the U.S. is more open to immigration under Biden immigrants may choose to move there instead.

      • Average Man 3 years ago

        This is the thing I keep thinking re. immigration. Canada got a real Trump bump in terms of not only the number of immigrants applying, but the earning power of those immigrants. A lot of folks that would have tried their luck in New York or Texas or Seattle or California came to Toronto and Vancouver and Ottawa and Calgary over the last four years. Not only will those kind of folks not be coming here anymore, but the ones who came from 2016-2020 may now decide to take a delayed crack at the American Dream.

        And I am a big lefty bleeding heart. I am fine with taking your huddled masses yearning to breathe free. Loads of those people have come to Canada with nothing and they or, more often, their kids have been big contributors to this country. In the long run, it’s still a plus. But if your economy is dependent on the type of immigrants who are gonna be able to buy a house within two or three years of arriving, and ideally without the use of questionable hot money, we’re not gonna see a lot of those.

  • Side note 3 years ago

    Picture is Bow tower in Calgary, completed in recent years.
    Also Telus tower and Brookfield tower have been built in Calgary, adding huge office capacity.

    25% of Calgary office space now sits empty, and needs investment of 1 billion+ tax payer dollars, lest the downtown become spook town (after 5 nobody was there anyway)

    We do not have a real estate problem, we have a banking/speculation problem.

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