What are Canada’s next hot real estate markets?

A sold sign is seen at an empty lot in a new sub division in Calgary, Alberta, April 7, 2015. (Reuters)

If you haven’t read a pixel about Canadian real estate over the last decade, here’s a quick summation: Vancouver and Toronto are impossibly hot markets that will either collapse under their own weight or make everyone who buys there a multi-millionaire by retirement.

But if you weren’t lucky enough to have bought into one of those markets a few year’s ago, you’re probably wondering what the next hot one will be. MoneySense recently identified Calgary as the next hot one. But it’s a big country, and there are several cities and towns where location, demographics and economics suggest a home purchase today may bring strong returns over the next few years.

Yahoo Canada Finance asked three real estate experts which cities may soon see the kind of price escalation we’d all like to take part in.

Christopher Alexander, regional director at RE/MAX Ontario-Atlantic Canada

While Toronto and Vancouver get the headlines, the really sharp price gains of the last few years have been in areas surrounding those cities. The outer reaches of the Greater Toronto Area (GTA), for instance, have seen price soar to the point where they now are quickly becoming inaccessible to first-time buyers. And this is now extending outwards, says Alexander.

“What we’ve actually noticed is outside of the GTA is a lot of markets are getting an influx of demand, because Toronto is just becoming unaffordable for a lot of people,” he says.

Two cities that stand out for him are Ottawa and particularly London, which is just a two-hour drive from Toronto, close to the United States, and home to a university. With a population of just under 500,000, it also has jobs and can provide an urban experience at a lower cost than the larger centres.

“If you look at London, the average sale price is $310,000, (and) the average price has gone up 13 per cent from last year,” he says. “Most of our agents out there are saying the days on market are going down and it’s becoming a real seller’s market.”

Diane Usher, senior vice-president at Johnston and Daniel, a division of Royal LePage

Usher also sees GTA spill-off driving the hottest markets, but her preference is a little closer to the core. Hamilton and Barrie both stand out for her. While their average prices are higher than London’s, they are also within reach of commuting distance to Toronto, which gives prices a higher upside.

“I can see Hamilton continuing to escalate in prices,” she says. “And Barrie has shown some tremendous increases in availability and price, but it’s still affordable and it’s still great commuter access to Toronto.”

She puts particular emphasis on the commuter connections to Toronto, which open the markets to buyers who want lower housing costs, but who don’t want to uproot their working lives.

“That’s sort of the key,” she says. “More and more people have the ability thanks to technology of working remotely. So you can work in Barrie or Shelburne very affordably and still connect to an urban centre, coming into town one time a week instead of five times a week.”

Elton Ash – Regional Executive Vice President, RE/MAX of Western Canada

Ash sees continued strength in the Vancouver market, despite the recent imposition of the 15 per cent foreign buyers tax. But in terms of future gains, he sees better opportunity on the other side of the Rockies.

“Right now I can tell you Alberta is the market to invest in from anybody’s perspective, simply because real estate prices have devalued somewhat,” he says.

Working in Alberta’s favour is the cooling effect of the oil price decline of the past three years, which has acted as a kind of release valve on what was a hot market. And attached to that is the expectation that at some point, the province’s energy industry will rebound.

“You’ve got a bit of a buyer’s market in Alberta, and we know that oil is cyclical. It will return, just as it has in the past,” he says. He’s high on both Calgary and Edmonton, but says Calgary has the edge because of its status as the head-office city of Canada’s oil industry.

Of course, there are also considerable voices who say that after a real estate boom that survived the U.S financial crisis and recession, we are long overdue for a serious price correction. Just last week, Goldman Sachs said there was a 30 per cent chance of the Canadian market declining in 2017.

Ash doesn’t see that happening, though he agrees that the Canadian housing market is currently in uncharted territory.

“The country has been in a very unique real estate position for the last decade.”

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