For the past three months, housing activity has begun to pick up in the GTA market, while sales in the Vancouver market continue to struggle. According to Scotiabank senior economist Marc Desormeaux, there are several reasons behind the market’s diverging performances.
“August Canadian Real Estate Association data suggest sales in the Greater Vancouver area are stabilizing, though activity remains well below year-ago levels,” he writes, in a recent note.
For a closer look at what is affecting both markets heading into the fall, Desormeaux has created five charts that compare and contrast the conditions in both markets.
1. Toronto home sales continue to outpace the Vancouver market
What’s going on here: Desormeaux tracked Vancouver and Toronto home sales over the past year, highlighting the implementation of the Ontario government’s foreign buyers’ tax in the spring of 2017 and the BC government’s new housing regulations in early 2018.
The takeaway: While Vancouver home sales fell sharply over the past few months, Toronto sales have risen for three consecutive months. There are several possible reasons for the differing numbers, but many economists have noted that the GTA market has had longer to adjust to the effects of its foreign buyer tax, which came into effect in 2017, while BC has been dealing with a new set of housing regulations introduced in February.
2. There’s a possible correlation between home sales and employment
What’s going on here: Desormeaux tracks Toronto and Vancouver’s total employment on a 3-month moving average over the past year.
The takeaway: Mirroring housing sales, Vancouver employment has been on the decline for months, while Toronto numbers have remained relatively flat. Household incomes are often tied to home buying activity, with buyers being more likely to enter the market when they feel that their income is secure.
3.Population growth also has a role to play
What’s going on here: Desormeaux tracks net inter-province migration in Alberta, BC, Ontario and Quebec over the past 18 years.
The takeaway: BC’s job vacancy rate currently sits at 4.2 per cent, the highest of any province. The province’s pricey housing market could be deterring interprovincial migration, affecting home sales numbers.
4. Housing is contributing less to BC’s economic growth
What’s going on here: Desormeaux tracked housing as a percentage of BC and Ontario’s economic growth over the past 18 years.
The takeaway: While housing still accounts for the majority of BC’s economic growth, it has begun to slow slightly over the past two years.
5. One thing BC does have going for it? A strong tech sector
What’s going on here: Desormeaux tracked tech sector employment in BC, Quebec, Ontario and the rest of Canada over the past 18 years.
The takeaway: “Where other sectors have witnessed slowing or contracting employment this year, BC’s mature but vibrant technology sector continues to expand,” he writes. “Technology sector employment growth is crucial to supporting BC’s near-term household income, housing demand and broader competitiveness.”