Toronto nabs hottest housing market title from Vancouver
Michael Babad – Globe and Mail
Canada’s overall housing market appears to be tame, though Toronto has stolen the label of “hottest” from Vancouver.
Sales of existing homes in Canada picked up by 2.5% in March from February, though the year-over-year level was slower at 1.6%, the slowest since last April, in fact.
The average price, in turn, dipped 0.5% to $369,677 from a year earlier, the Canadian Real Estate Association said today, though that’s skewed by regional differences, notably Toronto and Vancouver.
“If we step back from the monthly gyrations seen in this data release, we see that price and sales’ gains are coming in fairly flat (between –2% and 2%),” said Toronto-Dominion Bank economist Sonya Gulati.
“This profile is in line with our expectations for the year. This pace captures increased activity from low-cost borrowing conditions, but also negative headwinds from households beginning to curb their spending in light of interest rate hikes to come and record-high household indebtedness.”
Deputy chief economist Douglas Porter agreed.
“Price changes are also far from frothy nationally, dipping 0.5% year-over-year, and up a modest 0.7% year-over-year in Q1 – again raising the question of what all the fuss is about for Canadian housing (outside of Hogtown),” he said.
“The notable pullback in sales in pricey Vancouver distorted the result, as weighted-average prices actually rose 2.4% year-over-year. And, 19 of the 26 largest markets reported single-digit price increases from year-ago levels, hardly consistent with an out-of-control market.”
Over the past year, only three cities have chalked up price gains in the double-digit area, Mr. Porter noted, one of which is Toronto, at 10.5%.
Vancouver, where prices are now down about 3% from a year ago, and which had been skewed earlier by the pricey segment, is now moving in an opposite direction from Toronto, Ms. Gulati added.
“It was around this time last year that Vancouver was labelled the hottest housing market in the country,” she said.
“Back then, high-end home sales were driving up out-sized sale and price gains. The 2012 data suggest that the accolade has now been given to Toronto. But, both urban cities should experience weakness in 2013–14 as interest rates begin to inch up from current lows.”
The Vancouver and Toronto changes aren’t showing up only in resales, but also in new homes.
“These figures are consistent with those on the sale prices of new homes in February released last week,” said Professor John Andrew of the Queen’s University School of Urban and Regional Planning and School of Business.
“For those, Toronto also pulled the average national new home price up to an increase of 2.3% year-over-year. Vancouver new home prices declined by 2.9% in the same period. For the past several months, prices have continued to decline in Vancouver, while they continue to climb sharply in Toronto, led mainly by condominium sales.”
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Laurin & Natalie Jeffrey are Toronto Realtors with Century 21 Regal Realty.
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