For years, Vancouver has reigned as the priciest place to purchase real estate in Canada. Now, new findings suggest the West Coast city has been knocked from its first-place rank.
In an RBC Thought Leadership article, senior economist Robert Hogue reported that the Toronto-area has officially taken the crown as the most expensive city in the country as of last month. According to early reports from local real estate boards, Toronto’s composite MLS Home Price Index (HPI) benchmark of $1.26 million pulled ahead of Vancouver’s in January for the first time in decades, which is valued at $1.25 million.
Hogue noted that while this is a remarkable milestone, it’s certainly “not entirely surprising,” given how hot the Toronto-area market has become since the fall. Over the last five months, Toronto’s benchmark price has risen dramatically, including a 4.3 per cent monthly increase in January, equivalent to approximately $52,000. By contrast, Vancouver prices have also been on the up, just not to the same extent, Hogue pointed out.
Fierce market competition propels Toronto-area ahead of Vancouver
High buyer demand and historically-low inventory are continuing to keep things hot in both Vancouver and Toronto.
In Ontario’s capital, market activity showed little change from December 2021 to January 2022.
“It’ll take more than a spike of Covid-19 cases and a major snowstorm to meaningfully slow down the market,” wrote Hogue. “Activity stayed exceptionally robust last month despite pandemic restrictions being re-imposed and Mother Nature dumping the thickest coating of snow in a decade on the region, as home resales ticked down just 0.7 per cent from a strong December level.”
Active listings in the Toronto-area market stayed low too, down 44 per cent year-over-year by the end of the month.
Intense bidding wars drove Toronto’s composite MLS HPI benchmark to $1.260 million, up 33 per cent annually. Buyers have been particularly fond of single-family homes, which have increased in price by 36 per cent yearly and up to 40 per cent in areas like Durham and Peel regions. Toronto condos have also climbed 26 per cent compared to January 2021.
On the other side of the country, active listings showed little increase from December to January in Vancouver. Still, resale transactions rose eight per cent monthly and were down 4.4 per cent compared to the same period last year.
Vancouver’s composite MLS HPI benchmark was driven to a new high of $1.255 million, up 18.5 per cent year-over-year. Single-family home prices jumped by 22.7 per cent yearly, while condos reported a lower annual increase of 14 per cent.
“We expect tight demand-supply conditions will maintain considerable upward price pressure on all housing types in the near term,” said Hogue.
Calgary kicks off 2022 with a bang as Montréal stays steady
Calgary started the new year at full throttle, as market activity reported an all-time high. On a seasonally-adjusted basis, resale transactions soared 66.4 per cent yearly and 23 per cent monthly.
Although demand for single-family homes was strong, condo apartment transactions were up 94 per cent yearly. Supply for condo properties was less constrained than single-family homes, which reported a 19 per cent yearly decrease in inventory versus a 47 per cent annual drop. Meanwhile, the Calgary composite MLS HPI grew 11.7 per cent year-over-year in January.
“We expect even steeper increases in the near term,” said Hogue. “The stronger prospects for the provincial economy—led by a rebounding energy sector—has significantly boosted confidence in the housing market over the past year.”
In Montréal, the market continued on its “sideways,” trajectory, which it has been doing since spring 2021.
Home resales fell by an estimated three per cent from December 2021, and reported a 27 per cent drop from Montréal’s “unusual strength,” seen a year earlier. Although sellers hold onto a very strong bargaining position across the region, buyers need to bid prices aggressively in the suburbs, Hogue noted. In the North and South Shores, median prices have risen the fastest in January, increasing between 18 per cent and 35 per cent yearly.
In the near future, Hogue predicts that real estate activity will stay “exceptionally strong,” across Canada, but the Bank of Canada’s increase to interest rates will cool things off eventually.
“Accompanied by an expected material increase in housing completions, we believe this will gradually ease the extreme imbalance in the market and in time moderate the pace of price appreciation,” said Hogue.
