Quebec’s housing markets have put up surprisingly strong resistance to the general downturn and have been among the last in Canada to yield to the weakening trend. In fact, the main sign of cooling thus far has been a drop in resale activity since the
final quarter of last year from the near record levels that prevailed until just a few months earlier. Prices have held up reasonably well even if showing hints of tracking slightly lower in recent months.
Some of the persisting market strength in Quebec can be ascribed to sensible affordability levels, which had eroded only modestly during the market heat-up of the past few years. Moreover, this modest erosion has begun to reverse since the beginning of 2008 thanks to lower mortgage rates, higher family income and, in more recent months, flat or slightly declining home prices. At
the current pace of improvement, RBC’s affordability measures for the province will be back to historical averages by about mid-year, which should work as a mitigating factor against the effects of the recession.
