Toronto/Vancouver comparison: Condo prices

With home prices in Toronto and Vancouver at the costs they are, the condo sector has not only taken on a greater role from a market share perspective, but it is also the more affordable option for first time buys. In the fall, we reviewed the price trends of the two cities’ condo markets to compare similarities. This post will provide a winter update on the two condo sectors to continue to explore the extent the cities move in parallel.

Condo prices janSource: TREB, Six Housing

As is well known about the recent history of Canadian real estate, Vancouver’s market broke first with its runaway prices in 2016, then Toronto followed in 2017. Until those runs the two condo markets performed very similarly, if nine months apart. Since those initial year-over-year peak price gains the two cities have taken somewhat different courses. Vancouver experienced a second surge, while Toronto saw a more prolonged rise before easing.

YoY Condo JanSource: TREB, Six Housing Sense

Our second graph illustrates these varying paths by showing the year-over-year price changes for each month since 2015. As noted above, each city’s condo market tracked the same course leading into their first percentage increase peak. It was after these movements where we see the differences. For Vancouver, the city slowed in comparison to its nearly 30% gains only to rise again to the 30% level late 2017. On the other hand, Toronto was able to better maintain its peak gains, posting above 20% year-over-year gains for 12 consecutive months.

Moving away from monthly year-over-year statistics and looking at total increase, it has been Vancouver’s market that has gained the most over the past five years. Since 2014, Vancouver’s condo market’s benchmark price has increased by 77%. The market peaked at a 90% gain but has since dropped from that height. Toronto’s gains have also been impressive though not quite as significant, with the market up 70% since January 2014.

TS Condo JanSource: TREB, Six Housing Sense

Using our regular nine-month time shift comparison, we can see how the two cities compare, as we have done for the detached markets (Vancouver’s line shows Jan 2015 to the present and Toronto’s shows Oct 2015 to the present). The time shifted analysis highlights the alignment leading into the initial peak. From there, while the two lines are by no means opposites of each other, the parallel movements ended.

The most significant change to these markets since our fall update is that the Vancouver condo sector posted its first annual decrease in prices. Vancouver is down 6% from peak condo prices achieved in June 2018; however, it took until last month for that drop to equal a year-over-year negative return. As early 2018 experienced strong gains for the city, it seems the negative numbers are likely to continue for the time being.

Speaking of falling prices, it is worth noting that Toronto’s benchmark price did drop from December to January, and January’s price is a fraction below October 2018 as well, implying that prices may have stalled. However, the annual gains remain strong, so it will likely take changes to the supply level to push Toronto into Vancouver’s current situation.

This is what our next post will look at: comparing the sales to new listings performances of each city.

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