Vancouver/Toronto Comparison: Summer Update

Last fall we began to report on the similarities between the detached housing markets of Toronto and Vancouver, in particular how Toronto seemed to follow Vancouver’s price movements. Throughout the fall and winter Toronto stayed on this trajectory; however, as Vancouver’s struggles continued in the spring and Toronto’s market remained strong, the relationship weakened. This post will provide the summer’s update on this trend. Though it will show a weakening relationship, we continue to see overall similarities persist.

van to D JulySource: REBGV, TREB, Six Housing Sense

Comparing the two cities’ detached markets, we see how Vancouver’s prices are trending downwards while Toronto’s are very slowly rising. Since hitting their peak price in March 2018, Vancouver’s detached market has seen a benchmark price drop of nearly $200,000. The city has recently slowed its price free fall but has not yet shown definite signs of recovery or even bottoming out. Toronto, on the other hand, continues to maintain its price level with detached homes rising with inflation over the last year.

Van To D July TSSource: REBGV, TREB, Six Housing Sense

Leveraging the nine-month time shift since 2015, we better see how the two cities are beginning to move in opposite directions. Vancouver’s price line continues to point down, while Toronto’s has enjoyed a modest bump and is holding its place for now. Looking at the broader picture, however, the two lines show a relative return to pre-price spike positioning, even if they are now taking different paths.

Van TO PC TS JulySource: REBGV, TREB, Six Housing Sense

The final graph illustrates how each detached market has been performing year-over-year, while shifting Toronto’s timeline by nine months to demonstrate the similarity to Vancouver’s movements. As the graph shows, over the last several months Vancouver and Toronto no longer have matching price lines. At this point in Vancouver’s timeline, the city had already started its negative year-over-year results. In comparison, Toronto’s performance has remained in the positive, if only tracking with inflation.

Two mirror image price lines are not the only way Vancouver and Toronto’s detached markets can be closely linked. From their peak monthly benchmark price, Vancouver’s market is currently down 12%, while Toronto’s has fallen 8%. In fact, Toronto’s detached sector also dropped by 12% from peak to most recent low before rebounding to its current position. This is to say, it is unfair to categorize Toronto’s market as strong and Vancouver’s as weak, when there remain high similarities between their summer 2019 positions in comparison to recent years.

The fall housing market will be interesting for both cities, especially given the return to rock bottom mortgage rates. Have Vancouver prices fallen enough to bring buyers back to the market, or will confidence in the sector remain low and see prices continue to slide? Counter to that, is Toronto positioned to make meaningful price gains again or is inflation the best detached home owners can hope for?

The two price lines are no longer moving in perfect symmetry with each other; however, their varying actions have led to very similar results. Since 2014 Vancouver’s market is up 52% and Toronto’s is up 56%, though each market has since peaked and given back a healthy percentage of those returns. These results suggest that the two cities actually do impact one another. There are obviously local influences that have big impacts, but national trends may be overriding after all. It seems it is very unlikely that one city will prosper while the other fades.

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