Rendering: Lake & East

The following is a guest column by Ben Myers, Senior VP Market Research and Analytics at Fortress Real Developments. Fortress Real Developments partners with builders and developers across Canada and Ben assists in evaluating the market and projects that Fortress engages in.

In my latest Market Manuscript report, I talked about housing valuation studies at length, as people can’t get enough of the Canada is overvalued by X% studies. Hopefully you’re one of the nearly 1,700 people that downloaded that report and read about why those studies have little merit. However, I regret not including a reference to findings by Central 1 Credit Union that concluded that house prices are highly correlated with population densities. It really makes perfect sense, the more people in an area competing for properties, the higher the prices.

I wanted to test this theory with BuzzBuzzHome’s data on average prices per-square-foot (psf) for new housing in Canada, and population densities from the 2011 Census. I looked at municipalities in British Columbia, Alberta, Manitoba and Ontario that had over 800 persons per square kilometre (km), and had active condominium and low-rise housing projects last month. A total of 41 municipalities were analyzed.

The chart below presents data on the top 25 municipalities by population density, with Vancouver topping the list with over 5,200 people per square km to Airdrie, a small community north of Calgary, at just over 1,300 persons per km. I ranked each municipality by their average new condominium asking price and their new low-rise house price. Lastly, I compared the average pricing rank and the rank by density, to see where the big differences were.
House price chart There seems to be a fairly strong relationship between population density and new house prices, similar to the findings of the economists at Central 1 Credit Union. Based on population densities, high housing prices in Vancouver, Toronto, Victoria, North Vancouver, Burnaby and Richmond seem justified. More affordable housing prices in areas like London, Spruce Grove, Cambridge, Guelph, Edmonton and St. Catharines seem justified as well.

However, why do some cities and towns have a wide gap between their rank by population density and their rank for average new house prices? Some of the discrepancies can be partially explained below.

New Westminster sticks out at the top of the chart, this small city outside Vancouver borders on water and is essentially ‘built out’. However, many folks in the community still need to commute to areas with larger employment centres, and the bulk of the new housing product in New Westminster is mid-rise wood frame condominiums that are more affordable than high-rise concrete buildings. These factors contribute to its 15th ranked pricing.

Brampton has the 10th highest population density among the 41 areas examined, but a middle-of-the-pack pricing rank. Brampton has a reasonable amount of new housing supply, and the area has remained relatively affordable in comparison to other suburban GTA locations that abut the Greenbelt.

Conversely, Calgary is priced higher than its density would suggest. Very strong employment growth and immigration in recent years has boosted that figure, but it appears new housing price appreciation will be slower in 2015, and the city will likely move more in line with where its population density would forecast it to be at.

GTA suburban areas, many of which we mentioned in the last Big Data with Big Ben as being very hot, are valued above where their densities would suggest (Burlington, Oakville, Vaughan, Aurora and Whitby). All of these municipalities are somewhat exclusive areas for new homebuyers. They have relatively small downtown areas and a lack of large scale condominium or rental apartment developments (which increase densities), but are still very desirable areas for families to settle.

We have active or future condominium projects in Burlington, Oakville and Vaughan with ADI Developments, Symmetry Developments, Engine Developments, Empire Communities and Pace Developments, and are currently evaluating a mid-rise condo opportunity in Aurora – we anticipate these areas will see their densities increase, and catch up to their prices.

In Windsor you might see their density shrink to meet their pricing, but I hope not.

In conclusion, using population density to evaluate housing values appears to be much better than the commonly used variables such as rents, income or debt levels. However, like these often utilized variables, population density has many shortcomings. Density doesn’t take into consideration the location of employment, the ease of transportation, natural boundaries like water or mountains, or man-made borders like the Greenbelt or municipal urban boundaries, construction materials, the lending environment, the global economy, or the fact that your spouse doesn’t like the floors!

With that said, I hope I’ve added another talking point for amateur real estate analysts, more people equals more money. Discuss.

Good luck in your home search and click here to download the Spring 2015 Market Manuscript. Click here to read the Central 1 Credit Union report (see page 7).

Fortress Real Developments partners with builders and developers across Canada, and Ben assists in evaluating the markets overall and projects that Fortress engages in (Twitter: @benmyers29). Follow his blog posts and commentary on the Canadian Housing Market at or for more info on real estate investing, go to

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