Posthaste: Move over Vancouver, this is Canada's most expensive housing market now, says RBC – Financial Post
Toronto takes the crown, or should we say poisoned chalice?
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Vancouver, its coveted property stuck between the mountains and the sea, has been Canada’s most expensive housing market for so long (decades) that you kinda assumed it always would be. Well not anymore, that just changed, says a new report by RBC Economics.
RBC senior economist Robert Hogue says early reports from local real estate boards show that Toronto’s composite MLS HPI benchmark of $1.260 million edged out Vancouver’s at $1.255 million in January.
“It’s a stunning development though not entirely surprising considering how hot the Toronto-area market has become,” said Hogue.
While Vancouver prices have soared, even they have been outpaced by the gains of the Toronto market that climbed 4.3% or nearly $52,000 in January alone, said RBC.
TD economist Rishi Sondhi wrote last month that the crown — though many would describe it as more of a poisoned chalice — of Canada’s most expensive city was within Toronto’s grasp.
In December the average home price in Toronto was only 4% below the average in Vancouver, the smallest gap since 1991.
Sondhi says it’s a combination of housing regulations and supply that accounts for Toronto prices gaining 40% since 2018, compared to 13% in Vancouver.
A foreign homebuyer tax introduced in Vancouver in 2016, followed by a higher land transfer tax in 2018 targeted the luxury market, shifting buyers to less expensive homes or sending them to Toronto where they could get more for their money.
And while Vancouver is short on homes for sale, Toronto is worse. New listings rose 16% between 2019 and 2021 in Vancouver, compared with just 6% in Toronto, said Sondhi.
RBC’s Hogue said January showed it will take more than a spike in COVID-19 cases and the most snowfall in a decade to slow Toronto’s market down.
Home sales slipped just 0.7% last month, probably held back by low inventories. Active listings in January were down 44% year over year, near historical lows.
“Intense” bidding wars pushed prices in new heights in amount ($1.26 million) and rate of increase, 33.3%, he said.
Single-family homes saw the biggest increases with prices up 36% year over year, reaching as much as 40% higher in Durham and Peel regions. Condo prices also made impressive gains, with prices up 26% year over year.
“We see little that will materially alter these trends in the near term though expect that higher interest rates will gradually cool things down later this year,” said Hogue.
Real estate company Engel & Völkers believes Toronto’s supply shortage, the market’s main driver, is long-term.
Between 2016 and 2021, Toronto’s population grew faster than new residential housing, and by 2046, the City of Toronto will see its population grow from three million to four million, it said in its Canadian luxury real estate report.
“In addition to a lack of home sellers, new construction cannot keep pace with Toronto’s growing population. As a result, there will likely be a long-term supply shortage,” it said.
The shortage is acute in the $10 million and higher range, and Engel & Völkers says homeowners in this segment looking to downsize might want to do so now, when inventories are low and prices high.
One interesting phenomenon in Canada’s pricey home market that Engel & Völkers has observed is a rise in families pooling their resources and buying properties that house multiple generations. Statistics Canada backs this up, reporting that multi-generational households, which it defines as homes where three or more generations live together, are the fastest growing type in the country.
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GOING FOR GOLD When Canadian Jeff Adamson lost his last chance at wrestling glory by narrowly missing a spot in the 2012 London Olympics he came to a life-changing realization. To win he needed to take risks. He left his sales jobs and started SkipTheDishes Restaurant Services with four other partners, a Winnipeg-based business that was bought for $200 million by British online delivery behemoth Just Eat in 2016. Now Adamson is building a new company, Neo Financial, a fintech outfit that aims to disrupt the Canadian banking scene. To help him the five-time national champion and Pan Am Games bronze medalist has recruited people like himself, elite athletes in skating, bobsledding, volleyball and skiing. Perseverance is in an athlete’s makeup, but it is also essential to the DNA in a startup, which is why Adamson is stacking his team with ex-Olympians.
“There are not a lot of companies that value the character that is built into the athlete’s life experience,” Adamson told the Financial Post’s Joe O’Connor. “But we value that — I don’t want to say higher than an MBA — but we put a huge price on it.”
Just in time for the Olympics, read this fascinating tale of a Canadian company going for gold.
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Canada lost 200,000 jobs in January, data showed Friday, almost double the forecast. But while the headline seems a shocker, most economists were unfazed. “The reality is that no one will be seriously surprised by these figures, since it is almost a carbon copy of the setbacks seen in the second and third waves,” BMO chief economist Douglas Porter said in a note Friday. He said to look for a sturdy rebound now that restrictions have begun to ease in Ontario and Quebec.
The tricky bit is this is the last jobs report before the Bank of Canada decides on rates on March 2. However, the CPI report, out Feb. 16, should “provide plenty of justification for that first rate hike in less than four weeks from today,” said Porter.
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With high-flying growth stocks making all of the headlines, dividend stocks often get ignored.
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Healthy dividend stocks have the potential to:
Our content partner MoneyWise takes a look at three dividend stocks that Wall Street giant Morgan Stanley has on its radar.
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Today’s Posthaste was written by Pamela Heaven (@pamheaven), with files from The Canadian Press, Thomson Reuters and Bloomberg.
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