There is no shortage of reports on the Canadian housing market as it rides a tidal wave of exuberance from its biggest markets.
To give context, BuzzBuzzNews has gathered 13 more charts that explain where the market has been and suggest where it might be headed. The list follows our previous roundup from February, which took on everything from the cost of downtown condos in global cities — Toronto, Vancouver and Montreal still appeared cheap! — to the fact that Canada’s market hadn’t been this tight since before the Great Recession.
This time around, developments in the rental market, growing risks, and home price gains in GTA satellite markets are visually represented, plus more.
1. A century of Canadian house prices
What’s going on here? In a landmark study, a team of German researchers indexed Canadian house prices back to 1921.
The takeaway: Given home prices began to really increase after World War II, researchers suggest it’s a sign of “the classic view,” which argues land supplies decrease as economies grow, resulting in price gains.
2. How luxury rents compare around the world
What’s going on here? Analysts at Knight Frank, a real estate consultancy, looked at annual rent gains across the top 5 per cent of 17 different cities in the fourth quarter of 2016.
The takeaway: Toronto rents for luxury homes saw the greatest year-over-year appreciation of any market examined. It beat out places including central London, Shanghai and New York.
3. A key difference between the US housing crash and where Canada is
What’s going on here? This chart, care of CIBC’s economics team, shows that before American home prices went south, the stateside mortgage delinquency rate started to rise. In Canada, the rate has been flat since at least the start of 2013.
The takeaway: “One of the triggers for the US housing crisis, poor mortgage origination standards, looks to be less of an issue here,” write CIBC economists Avery Shenfeld, Andrew Grantham and Nick Exarhos.
4. But one trend suggests Toronto’s housing market may soon cool
What’s going on here? The blue line in this Capital Economics chart represents the Teranet-National Bank House Price index for Toronto, and the black one traces the city’s sales-to-new listings ratio (sales divided by new listings in a given month and expressed as a percentage, with anything over 60 per cent suggesting it’s a seller’s market).
The takeaway: Since 2005, the sales-to-new listings ratio has been a bellwether of Toronto price gains — and declines. It has recently been trending lower. Draw your own conclusions.
5. Canadian versus US residential construction as a share of GDP
What’s going on here? BMO Economics compares how much residential construction has contributed to the nominal GDPs in Canada and the US since the mid-‘80s.
The takeaway: What goes up, must come down. “Residential construction goes through pretty clear multi-year-period cycles,” explains BMO Senior Economist Robert Kavcic.
6. The most — and least — expensive new-construction GTA condo markets
What’s going on here? BuzzBuzzHome’s data team compiles the median price per square foot for condo units available each month in several GTA regions.
The takeaway: First-time homebuyers on a budget may want to look towards Durham Region, which has been the most affordable GTA market for the past year.
7. How Canada’s housing market risks evolved in 2 years
What’s going on here? Canada Mortgage and Housing Corporation (CMHC)’s housing market overall evaluations — based on the evidence of overheating price acceleration, overvaluation and overbuilding — spread out over 9 quarters and 15 census metro areas.
The takeaway: Since April 2015, the number of major Canadian housing markets CMHC flagged for strong “evidence of problematic conditions” has more than doubled, according to this chart specially updated for BuzzBuzzNews.
8. Ontarians mortgage payments as a percentage of income
What’s going on here? BMO Economics charts how much of Ontarians’ incomes have gone towards servicing mortgages since 1983.
The takeaway: In one way, Ontario’s housing market will soar to heights reached in the late-‘80s, just before the province’s last major housing crash, in about two years — “assuming stable mortgage rates and continued income growth,” BMO’s Kavcic notes.
9. The future of the Toronto rental market?
What’s going on here? CIBC Deputy Chief Economist Benjamin Tal provides a glimpse of future rental-housing construction in the GTA, looking at under-construction and proposed rental units.
The takeaway: Due to the Greater Toronto Area’s surging home prices, which have created more rental demand as would-be buyers get pushed out, the math on rental construction was beginning to make sense. In under two years, the number of units being built doubled. Unclear is whether or not Ontario’s expanded rent control will interfere.
10. Are GTA home prices mostly just a supply issue?
What’s going on here? Average home prices in markets relatively far outside the Greater Toronto Area, St. Catharines and Niagara Falls-Fort Erie, as charted by Sal Guatieri, a senior economist with BMO Economics.
The takeaway: “Just note that a lack of supply is probably not the main fuel for runaway prices,” writes Sal Guatieri in a note with the chart. “To wit, there is no shortage of zoneable land in places like St. Catharines, Niagara Falls and Fort Erie, where the Toronto sparks have recently landed, causing prices to rise as fast, if not faster, than in the late-‘80s inferno.”
11. Canada’s housing market is healthy. Well, sort of.
What’s going on here? Each quarter, RBC gives Canada’s four biggest housing markets a checkup based on 10 criteria.
The takeaway: By most standards, the Canadian housing market is “within historical norms or not posing any immediate threat.” The exceptions are affordability and rental-market balance, which are “modestly outside” norms, and the number of multi-family dwellings under construction, which received a red flag.
12. The GTA’s detached-home shortage summed up
What’s going on here: The number of single-family and multi-family condos that contractors have broken ground for from 1990 and on, charted according to seasonally adjusted annualized rates from CMHC.
The takeaway: “Supply composition has shifted since higher intensification policies were put in place back in 2006,” writes BMO’s Kavcic. Single-family home construction plummeted in the wake of Ontario’s Places To Grow Act, which makes sense given it was meant, at least in part, to curb urban sprawl.
13. Move over Vancouver — Toronto’s luxury market is tops in Canada
What’s going on here? Knight Frank ranked 100 global luxury markets in terms of annual price changes witnessed in the top 5 per cent of each last year.
The takeaway: Toronto’s luxury market has surpassed Vancouver’s by this measure. “Luxury prices in Toronto have risen on the back of basic market fundamentals,” Kate Everett-Allen, an international residential researcher for Knight Frank, told BuzzBuzzNews earlier this year. “Toronto is also competitively priced compared with other global cities, the city offers good transport links, [and ] high-ranking educational facilities.”
