Vancouver/Toronto Comparison: Detached Update

For the first time in years the detached markets of Toronto and Vancouver seem to be heading in opposite directions. Even when adjusted by our experimental nine-month time shift, Toronto is showing some strength while Vancouver appears to be in a free fall. After nearly five years of price alignment (with a nine-month time delay), one quarter of separation does not diminish the trend but it does put its future in doubt.

Van TO D Prices AprilSource: REBGV, TREB, Six Housing Sense

Over the last year detached prices in Vancouver have been in a nose dive. Prices are down 11% year-over-year and nearly $200,000 from the peak price in September of 2017. Toronto’s prices remain below its peak price of May 2017; however, after nearly two years of stagnate prices, the city is showing modest growth in line with inflation.

Detached TS Price AprilSource: REBGV, TREB, Six Housing Sense

Using the nine-month time shift we see just how similarly the two cities detached markets were behaving, just three quarters apart, until a couple of months ago. If the trend were to have continued, Toronto should have started to see price declines in the last month or two. Instead, though price gains have been modest, Toronto continues to see positive returns. There are multiple factors at play here, including that Toronto’s prices having not fully recovered from peak prices; however, this does mark the first time any opposite trajectory in pricing has been seen between the two cities with the time lag applied in over five years.

Price TS % AprilSource: REBGV, TREB, Six Housing Sense

By comparing year-over-year gains and leveraging our nine-month time shift analysis, we can see how the two cities are starting to diverge for the first time in years. Traditionally, Toronto has under performed compared to all of Vancouver’s price movements, so Toronto passing Vancouver in year-over-year gains could simply reflect weaker prices from a year ago; however, it still shows a break in the trend. It is worth adding that despite these trends and Vancouver’s recent price drops, in direct comparison over this time period, Vancouver’s and Toronto’s price gains are essentially even, with a 53% increase for Vancouver compared to 55% for Toronto over the last 5 1/2 years.

Van TO S2NL mthly AprilSource: REBGV, TREB, Six Housing Sense

The diverging price movements may be best explained by each city’s sales to new listings ratio. In comparison to the monthly totals over the past six years, Vancouver’s ratio is well below its average performance. In April the detached ratio dropped to its lowest point at 46% below the average monthly total. Toronto is also below its average ratio level; however, it is showing signs of recovery. The January ratio had the city 27% below its monthly average but that number has steady improved and was only a 15% decrease last month. Despite being below its five year average sales to new listings ratio level, Toronto’s detached market remains in balanced territory, while Vancouver’s is very much a buyer’s market and the prices are clearly reflecting these circumstances.

The time shift analysis has never been absolute, nor was it intended to be; however, until this quarter it had been an accurate predictor for Toronto’s general performance. One opposing quarter to this analysis does not mean the trend is over or that it never existed. It does, however, clearly show how the two cities are moving in very different directions, at least for now. We will continue to follow these trends and leverage the time shift comparison to see how performances align or vary in the future.

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