It is officially more expensive to purchase a house in Toronto than it is in Vancouver. According to the February sales numbers released by both the Toronto and Vancouver regional real estate boards, the average detached home price in the 416 has hit a new record of $1,573,622, compared to the $1,474,200 benchmark in Vancouver. It’s a pricey milestone that reflects the diverging trends in Canada’s biggest markets; while both cities struggle with available housing supply, Vancouver detached home sales have seen drastic dips, while Toronto’s continue their upward trajectory.
Toronto Supply is Tighter Than Ever: TREB
Despite rising prices, Toronto real estate sales continued at a healthy clip, with 8,014 homes trading hands via TREB’s MLS system in February – an annual 5.7% increase. TREB President Larry Cerqua says Torontonian buyers continue to view real estate as a worthy investment, with demand for both low- and high-rise home types supported by a mix of first-time and move-up buyers.
“The high demand for ownership housing we’re seeing is broad based, with strong sales growth for most low-rise home types and condominium apartments. This makes sense given the results of a recent consumer survey undertaken for TREB by Ipsos which found an even split between intending first-time buyers and existing homeowners who indicated that they were planning on purchasing a home in 2017.”
In fact, the survey finds first-time buyers make up more than half of potential purchasers in the Greater Toronto Area at 53%, up from 49%. The ratio of first-timers is even more concentrated in the City of Toronto, which Cerqua believes is due to bigger condo supply, which are a popular entry point into the market.
He also took the opportunity in TREB’s February report to reiterate Ipsos’ findings that foreign buyers represent only 5% of the marketplace, with 80% of out-of-country buyers purchasing their principal residence, a home for a family member, or as an investment to rent out. It’s proof government policy makers should shift their focus to improving home supply, rather than discourage demand, Cerqua adds.
Listings in the GTA declined 12.5% to 9,834 units, with the average month of inventory lingering at one month or less in Toronto’s most in-demand neighbourhoods. This is the clear cause behind the city’s rapid real estate price appreciation stated Jason Mercer, TREB’s director of market analysis. “The listing supply crunch we are experiencing in the GTA has undoubtedly led to the double-digit home price increases we are now experiencing on a sustained basis, both in the low-rise and high-rise market segments,” he said. “Until we see a marked increase in the number of homes available for sale, expect very strong annual rates of price growth to continue.”
Toronto MLS Sales & Average Price By Home Type February 1 – 28, 2017
|Y-o-Y Change (%)||-6.80%||6.00%||3.0%%||29.80%||35.40%||32.50%|
|Y-o-Y Change (%)||-16.00%||-6.20%||-9.50%||27.60%||33.20%||29.40%|
|Y-o-Y Change (%)||2.40%||7.70%||-6.50%||15.70%||32.40%||28.00%|
|Y-o-Y Change (%)||14%||0.30%||15.90%||18.20%||23.60%||19.20%|
Vancouver Sales Plunge Continues
It’s getting slightly cheaper to buy a Vancouver-area home – but the west-coast city is still far from wallet friendly. The Metro Vancouver region’s MLS Home Price Index Composite Benchmark has slid 1.2% year over year to $906,700, while overall sales fell 41.9%, to only 2,425 homes sold.
Dan Morrison, President of the Real Estate Board of Greater Vancouver, blamed the slowdown on lack of available listings, along with inclement weather. However, the city remains firmly in sellers’ market territory, with an active sales-to-listings ratio of 31.9% – a 10-point increase from the previous month. True downward pressure on prices occurs when the ratio dips below 12 points, while levels over 20 support rising home prices.
“While home sales are not happening at the pace we experienced last year, home seller supply is still struggling to keep up with today’s demand,” Morrison said. “This is why we’ve seen little downward pressure on home prices, particularly in the condominium and townhome markets.”
Total new listings coming to market were the lowest seen since 2003, with only 3,666 homes brought to MLS – a 36.9% decrease from 2016, and 11.6% down month over month. However, compiled with existing listings, the number of homes for sale is actually slightly higher (4.9%) than last year’s levels.”
According to REBGV, the average detached home price has slid 6.5% over the past six months to $1,474,200, with sales down a whopping 58.11% year over year. Vancouver condo sales fell 28.8% year over year, now priced at $526,300 (+2.3% over six months), and townhomes down 33.1% year over year, and priced at $675,500 (-0.3% over six months).
In all, sales were 7.7% below the 10-year average for the region.