Toronto’s housing market continues to defy skeptics, Calgary’s is upward and onward, Vancouver has “sprung back to life” and Montreal remains a relative bargain, says a BMO Capital Markets assessment of “a year of pleasant surprises” on Canada’s real estate front.

In fact, the market has “pulled up sharply” from last year’s downturn and “is cruising at an above-normal altitude,” says BMO senior economist Sal Guatieri in a cross-country checkup on four key housing markets.

• Toronto is “hardly landing,” says Guatieri, with sales up 9 per cent over historic norms in the three months up to October. But benchmark prices, up 4 per cent over a year ago, remain “lofty” at more than six times median family income.

But with close to 60,000 new condos under construction and developers offering more incentives, such as free furniture and waived maintenance fees, in the face of a dramatic sales slowdown, price gains should slow in 2014, says Guatieri.

While there is mounting concern that far too many new units will be coming on the market, the report says the shortage of new detached homes, and their high prices, will force more buyers into condos and they should absorb the new supply.

• Calgary is the place to be: It is the strongest major market in Canada, with house sales 20 per cent above historic norms and benchmark prices up 8 per cent, virtually making up for the 16 per cent decline in prices from 2007 to 2009.

Prices remain at a more reasonable four times median family income and demand remains extraordinarily high because of the number of immigrants and young people heading west looking for work.

• Vancouver has pulled out of last year’s steep decline — sales were down 33 per cent, year over year, at the peak, and prices were depressed by 6 per cent — but “affordability is Vancouver’s Achilles’ heel,” says the report.

“We continue to expect detached house prices to decline moderately in the medium term,” says Guatieri.

Condos remain the most affordable option, eating up 29 per cent of median family income, now that prices have fallen to essentially where they stood six years ago, says the report.

• Montrealmay be the weakest of the four major markets, but that’s good news for house hunters. Sales remain 9 per cent below historic norms and prices are up just 2 per year over year.

That makes the median price of a two-storey detached home in Montreal just $382,000, compared to $565,000 in Toronto and just over $1 million in Vancouver.

http://www.thestar.com/business/2013/12/05/2013_a_year_of_pleasant_surprises_for_housing_market.html