But even in a sellers' market, there are some locations that still offer up some good price points with investment potential, and Windsor and Thunder Bay are two of the standout options.
Thunder Bay has an average MLS house price of $150,226 through March - a 7.7 per cent increase over last year but still enough to keep buyers coming strong.
Builders are active as well, with new home activity expected to grow 27 per cent this year, according to the CMHC. Windsor-Essex County has an average home price of $161,636 through May - a 4.8 per cent increase over last year.
An improving economy there has helped it reach a balanced market after a surplus of listings last year led to a second year of price decline. Now prices are up for the first time since 2007 in Windsor-Essex County.
The key to long-term investment success, however, is not to worry about the differences in price from month to month, but to find a place with good fundamentals.
Students push heavy demand market in Thunder Bay While things are likely to temporarily slow for the summer, Thunder Bay has fundamentals that won't be leaving anytime soon. With a population of more than 113,000, its thriving real estate market has been pushed by its rental demand.
Three key fundamentals are Confederation College, Lakehead University and the Thunder Bay Regional Health Sciences Centre. All three are located fairly close to each other and the residential properties of Thunder Bay.
It's all helped to keep a vacancy rate around 2.3 per cent. Some parents of college and university students have also gotten into the investment market, says Wendy Siltamaki, president of the Thunder Bay Real Estate Board.
"They buy a property for their kid, then rent out to other student friends. After four years, they look to sell the house," she says.
There are those parent investors, but there are also regular investors who find Thunder Bay's prices much cheaper than those across Canada, Siltamaki says.
"Investors are coming in from all across Canada. I have one coming in from Calgary this week," she says. "They call us up and just buy property sight unseen."
Three-bedroom houses can sell from between a typical range of $100,000 to $150,000 near the university or college, says Siltamaki, with rents usually going for about $500 per room, all inclusive.
That means a fully rented house would get $18,000 a year in rent for a yield of 12 to 18 per cent, based on those averages.
There are also the many employees of these schools and hospital which make up a significant part of the market as well.
One of the most popular places to live is River Terrace, a subdivision adjacent to the hospital with some higher-end homes. Sherwood Estates is also expanding with new construction near the hospital.
"They've really been a big draw for the higher priced homes," says Saltimaki. Thunder Bay has been expanding at a heavy pace, but the demand this year is also well above its usual pace.
In March and April, Saltimaki recalls seeing anywhere from five to 12 offers per property for sale.
Lately there have been less, but most homes still sell within a week, she says.
"When I started in this business 17 years ago, there were 1,200 properties and it took nine months to sell a house," says Saltimaki. "That was tough."
Now the challenge is finding a property for buyers, some of whom go five or more offers without finding a house yet.
As Windsor recovers, investors come back. Since the fall of 2009, Windsor's market has remained busy. Once the market showed signs of recovery, that pent up demand from 2008 and the first half of 2009 came back.
Prices had declined for the past couple years, but they are now slowly back on an upward trend.
A study commissioned by Re/Max recently placed Windsor as the most affordable place to live of 35 major centres across Canada.
Record low interest rates and large amounts of foreclosures helped to fuel the market, says Chris MacLeod of Prudential Select Realty.
"The job loss which has affected this area has subsided and some jobs have begun to return to the area, which has given the market a boost," he says.
More growth this year on the shorter term might be limited though as interest rates rise, but in the longer term, MacLeod says Windsor will experience significant growth.
A few of the driving points are the $1.6 billion Windsor Essex Parkway Project and the $900 million border crossing project. The Parkway would be the largest capital project in Canadian history.
"This kind of investment, employment, and its effect on the local economy can be nothing but positive for the Windsor real estate market," says MacLeod.
Most recently the greatest demand has been for properties under $150,000 - accounting for 60 per cent of the units sold thus far this year through May. That's driven by first-time homebuyers and a continued presence of investors looking for foreclosed or other low priced homes, especially in East Windsor.
Fixing up older homes has proven a popular option for homebuyers and investors alike. The University of Windsor has helped drive investment opportunities, says MacLeod.
"We own a student rental which we bought for $82,000, which has a gross income of $14,000 a year," he says. "I sold another property to a U of W student for $130,000 which as an annual gross income of $19,200."
Around the core of the city, there are also rental duplexes and multi-unit buildings which produce similar returns, says MacLeod.
Vacancies can always be a risk, however. Windsor has been hit by a declining auto industry, growing outmigration, a decline in U.S. visitors since 9/11 and a dropping U.S. dollar value.
So while it is affordable, it has been the result of some very difficult times for many. The unemployment rate, while declining, is at an Ontario high of 11 per cent.
But since Windsor was hit by a downturn well before the rest of the country, it has gotten a head start in reinventing itself, says MacLeod. People are now coming there to invest and retire.
"Imagine you sold your $750,000 home in Toronto and moved to Windsor and Essex County and bought a similar home for $300,000 in a better climate with milder winters and hotter, longer summers, and used the proceeds to top up your RRSP," he says.
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With the recent surge in national real estate activity to start this year, finding an affordable home or investment property in larger markets like Ontario have certainly presented some challenges.