Vancouver/Toronto Comparison: Time Shift

This post is our third installment tracking the price comparisons of the markets of Vancouver and Toronto. Recent trends have shown that Toronto’s market trails Vancouver’s, and when a nine-month time shift is removed, the two cities have near parallel movements. As we did in November, this post will be our quarterly update on this trend with respect to each city’s detached housing market.

VanTo D Feb 2019Source: REBGV, TREB, Six Housing Sense

The first graph shows the price history of each city’s detached market since 2014. The graph shows similar movements with both experiencing a great initial price run up before falling back. Vancouver was then able to recapture these gains throughout 2017 before starting to fall once again in 2018. Toronto also gave up ground after its initial price surge; however, unlike Vancouver it has not been able to regain the full amount and has drifted at a relatively steady lower level since.

D P TS Feb 2019Source: REBGV, TREB, Six Housing Sense

To illustrate the similarity of the two markets, the second graph imposes the time shift, by altering Toronto’s timeline by nine months (Vancouver’s line is from January 2015 to the present, and Toronto’s from October 2015 to the present). In doing this, the two lines show high overlap in basic movements. This is bad news for Toronto going forward, should this pattern continue, because Vancouver is in a clear downward trajectory.

YoY DP Feb 2019Source: REBGV, TREB, Six Housing Sense

The third graph shows the year-over-year price changes by month for each city since 2015. In this graph we again see similar movements, though slight variations in the patterns. Toronto sunk lower than Vancouver following the first price surge, while Vancouver managed to avoid producing negative year-over-year results until 2018. Toronto is back into positive growth territory, though in the single digits barely meeting inflation.

To demonstrate the consistency of the movements, the final graph shows the two cities’ price changes with Toronto’s timeline adjusted back by nine months. In doing this, the graph lines show Vancouver’s market from January 2015 to the present, and Toronto’s from October 2015 to the present.

PC TS Feb 2019Source: REBGV, TREB, Six Housing Sense

From our nine-month time shift, we see how in step the two cities have been in the past few years. Perhaps most importantly, in this time shift view, Toronto’s monthly year-over-year price change has not out performed Vancouver for four years. If Toronto does continue to trend nine months behind Vancouver, real price decreases will be occurring in 2019. However, with Toronto coming off of a relatively flat 2018, it does seem hard to believe Toronto will match Vancouver’s 10% price drop nine months from now.

The time shift comparison does not provide an exact match at all points in time; however, the price movements do match up shockingly well at a roughly nine-month adjustment. While the numbers can be off by a month or so in either direction at times, the pattern has clearly held for four years now. In our last update, for Toronto to follow Vancouver’s movements we were forecasting a price gain, which was realized. In this market though, predicting a year-over-year gain seemed far from bold. However, for January’s update to continue in Vancouver’s footsteps, Toronto’s price needed to fall from October, and this did happen. Over the coming months, for Toronto to match Vancouver the price changes will need to fall into the negatives. If this occurs, it will be the strongest validation yet for the shift time shift hypothesis. As always, we will continue to monitor.

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