The much-ballyhooed "soft landing" in real estate may already be underway, Bank of Montreal says, as booming price gains in two of Canada's three biggest housing markets are the exception rather than the rule in the rest of the country.

While the closely watched national average price figure released on the 15th of every month by the Canadian Real Estate Association is still showing strong annual gains, "strong gains have been entirely a Toronto and Vancouver story," BMO economist Robert Kavcic says in a research note Thursday. 

The latest CREA numbers, released last month, show the national average ticked up another six per cent in March to $431,812.

But there's much more weakness than that headline figure would suggest.

In three-quarters of the 26 biggest metropolitan areas in Canada, average gains top out at about four per cent, and are actually contracting in many places.

"Suffice it to say that strong Canadian home price gains are now almost purely a two-city phenomenon, and the so-called soft landing (harder in Alberta and Saskatchewan) is well underway across most of the country," Kavcic says.

Montreal, Canada's second-largest real estate market, is one of the areas where the average house price across all categories of housing is already in decline, with the MLS HPI down 0.3 per cent in March, according to CREA.

Moncton, N.B., and Regina are also in negative territory.

House prices across all types had been trending downward in Ottawa since the spring of 2014 before an uptick last month. And average house prices in Newfoundland declined by more than eight per cent in February compared to a year ago, CREA data shows.

Although it's still in the black on an annual basis, new data out of Calgary on Thursday shows that city's average house price has now declined for two months in a row as the impact of cheap oil filters through the broader economy.

A tale of two cities

Even in Toronto and Vancouver, the price picture isn't rosy across the board.

While the much-revered single family home continues to inflate further and further out of reach for many (the average single-family home price is up 25 per cent in Toronto since 2012, condo sales make up an increasing percentage of the total housing stock, and prices aren't rising by as much as many seem to think. A construction boom has flooded the market with new stock, and that has kept a lid on price increases.

There were 57,000 condo units under construction in Toronto at the end of last year. That contrasts with just 7,200 single-family homes being built — the largest gap between those two types of housing since the 1960s, and a sign that the housing market really is different this time.

"Toronto is not building too many homes, but rather the composition of the housing stock is changing dramatically— buyers used to move out of the city for more affordable real estate, but they now have to effectively move 'up' the city," Kavcic notes.

While the fate of the condo market is an open question, demand for single-family homes is forecast to stay strong in part because of a demographic boom in Toronto of people aged 35-44, a cohort that Kavcic calls the prime "backyard-hunting years."

"Barring a major external shock, condo prices could be in for a prolonged period of sluggish growth or stagnation, while detached home prices push higher through the end of the decade until demographics begin to weaken," he said.