Vancouver/Toronto Comparison: Condo Sales to New Listings

If sales to new listings ratios foreshadow what is coming next for a housing market, then both the condo markets of Vancouver and Toronto may be in for some declining results. For Vancouver, this would mean continued negative year-over-year price returns; however, for Toronto it is less obvious what the extent of the impact on prices would be. While the massive double-digit gains of the past two years may end, Toronto’s sales to new listings ratio has a distance to fall to end the price growth altogether.

When we examined the two condo markets for their price growth patterns, we saw that the similarity between Vancouver and Toronto was fading over the past year or so. Looking at the sales to new listings ratios, however, paints a picture of two cities experiencing very similar trends. For this update we reviewed sales to new listings (S2NL) results against each month’s five-year average performance, as well as the year-over-year figures. As always, we employed our nine-month time shift to see if Toronto’s results follow Vancouver’s.

Van TO C S2NL M FebSource: REBGV, TREB, Six Housing Sense

The first graph shows the monthly S2NL ratio in comparison to the five-year average for each month. Both lines show how inventory grew tight in advance of each city’s initial price boom. Since then Vancouver has fallen well below its five-year average while Toronto is hoovering slightly above it.

Van TO C S2NL M TS FebSource: REBGV, TREB, Six Housing Sense

This graph shows the nine-month time shift (Vancouver’s data from Jan 2014 to the present and Toronto’s from Oct 2014 to the present). Showing the time shift we see that while not all peaks and valleys are matched perfectly between Vancouver and Toronto, the general path they are taking holds in good alignment. More recently, Toronto’s S2NL performance has been able to hold at or above its five-year average; however, if the two cities remain in close proximity, the next few months will be a test for Toronto. Certainly, with the news that a majority of individuals holding an investment property are considering selling within the year (62%), a falling sales to new listings ratio is possible for Toronto.

Van TO C S2NL yoy FebSource: REBGV, TREB, Six Housing Sense

The year-over-year results show how each city’s S2NL ratios rose sharply leading up to their first price peaks. Since each respective initial peak, annual comparisons have been more controlled. Until 2018 for Vancouver, each city had seen year-over-year changes of plus or minus 20%.

Van TO C S2NL yoy TS FebSource: REBGV, TREB, Six Housing Sense

By using the time shift comparison (Vancouver from Jan 2015 to present and Toronto Oct 2015 to present) we are able to illustrate just how aligned the year-over-year changes have been for the two condo markets, if nine months apart. As we saw from the previous time shift graph against the five-year average, not all monthly highs and lows are matched perfectly but the two general lines have moved up and down together. This is problematic for Toronto because the next movement will be down if the trend continues.

Whereas the detached markets of Toronto and Vancouver showed high consistency across prices and sales, the condo sectors review was interesting as the correlation appeared stronger on the sales to new listings side. That said, nothing has the power to impact prices more than growing or shrinking inventory levels. If Toronto continues following Vancouver by nine months, 2019 could bring lower sales to new listings ratios and thus rising inventory levels. If that happens, prices will be interesting to watch.

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