He expects job growth and low interest rates will keep activity strong in 2004, "but we cannot guarantee that annual sales will set another record."

New housing starts are also expected to be strong, says CMHC's Dugan, likely hitting 204,100 units in 2004, down slightly from 218,500 last year, which marked a 14-year high.

"In terms of where the action is, activity is strong across the country," says Dugan. " Many provinces are experiencing record levels of activity in recent years."

With the federal bank expected to ease interest rates in the short-term - driven in part by a soaring loonie, which has gained about 20 percent against the U.S. dollar in the past year - housing activity is expected to remain strong.

Carl Gomez, an economist with RBC Financial Group in Toronto, says that compared to the housing bubble of the 1980s, the current market has stronger fundamentals to support the rising prices.

Gomez, whose firm publishes a regular housing affordability index, says the percentage of household income needed to carry a typical bungalow on a five-year mortgage has shrunk from 48 percent in 1989 to about 32 percent today. For a one-year mortgage, it is as low as 28 percent.

In 2004, Gomez expects more of the same, although he notes there are "not a lot of fence-sitters" or first-time home buyers left to enter the market. So 2004 will be "governed by move-up buyers" and families looking for "bigger homes in the suburbs."

Atlantic Canada
Gomez says Atlantic Canada remains the most affordable region of the country, and that's not expected to change. "You can buy a beautiful home for $150,000," he says. However, the average household income of $41,700 remains low. "Over the long term, we see people leaving the cities and [Atlantic Canada] is so affordable," says Gomez.

Average home price in key cities, according to CREA statistics from late 2003.

St. John's, Nfld: $126,101
Halifax-Dartmouth, N.S.: $177,567
P.E.I.: $88,852
Saint John, N.B.: $106,267
Fredericton, N.B.: $113,458

Quebec
Gomez says Montreal has seen a upswing in housing prices, and the "boom continues," as resales were up 30 percent in the third quarter of 2003. There's a "deep pool of pent-up demand," he says, and even though the typical household has $44,000 in income, housing prices are still low enough to make Montreal one of the most affordable big cities in Canada.

Average home price in key cities, according to CREA statistics from late 2003.

Quebec City: $124,142
Montreal: $175,670
Hull: $134,839
Trois-Rivières: $80,526
Saguenay-Lac St. Jean: $95,156

Ontario
Gomez says the Toronto market seems unfazed by the economic shock of SARS, the respiratory virus that hit the city's tourism business hard in the summer of 2003. He expects the market to continue "easing into balance," as the number of new listings and new sales continue to rise. He also expects condo sales to slow as more new properties hit the market. Nonetheless, the city remains one of the most expensive in Canada, as RBC's Affordability Index hovers at around 38 percent of household income.

Average home price in key cities, according to CREA statistics from late 2003.

Ottawa: $221,249
Toronto: $284,955
Durham Region: $213,452
Hamilton-Burlington: $195,144
Kitchener-Waterloo: $200,694
London-St. Thomas: $159,529
St. Catharines: $173,038
Sudbury: $114,039
Thunder Bay: $129,666
Windsor-Essex: $141,317

Prairies
Calgary remains strong, and although Gomez says its "prices are considerably higher" than many other cities, household income levels are also high, making its home affordability score one of the lowest in the country.

Manitoba faced an "inventory crunch" in 2003, and the province "can continue to expect consistently higher prices even if the lack of listings deters potential buyer demand in the near term."

As for Saskatchewan, Gomez says it's a tight but affordable market with balanced conditions foreseen in 2004. A surge in housing starts and low mortgage rates will give older homeowners some options in terms of moving up or moving down, he says.

In terms of supply, average home price in key cities, according to CREA statistics from late 2003.

Winnipeg: $140,972
Regina: $96,687
Saskatoon: $124,622
Calgary: $211,665
Edmonton: $167,474

British Columbia
"Vancouver is a very, very strong market. There's a lot of pent-up demand," says Gomez. "Supply is hard-pressed to keep up with demand."

In terms of the supply, average home price in key cities, according to CREA statistics from late 2003.

Greater Vancouver: $342,761
Victoria: $363,161

Jim Middlemiss is a freelance writer and lawyer based in Toronto, Ontario. He's a frequent contributor to National Post, Investment Executive and Wall Street and Technology.