Canada’s two priciest markets earn different ratings

With the release of both Vancouver’s and Toronto’s latest real estate statistics, Royal Bank of Canada has identified negative trends in one and positive trends in the other.

Toronto

According to RBC, Toronto’s market returned to balanced territory.

“New listings rose significantly (the most since May 2010) by 33.6% in April from a year ago and resales were down 3.2% for the first time since April 2014,” RBC said in a recent research report, entitled Positive developments in Toronto’s housing market in April, not so much in Vancouver. “This implies that the sales-to-new listings ratio fell sharply. Back of the envelope calculations suggest that the ratio could have fallen to around 0.53 which would be the first time it fell below 0.60 (considered to be the threshold separating a sellers’ market and a balanced market) since July 2014. More balanced demand-supply conditions in April did not have an immediate cooling effect on benchmark prices.

“The MLS HPI accelerated further in April to 31.7% y/y from 28.6% in March. However, the rate of increase in the average price of homes sold moderated from 32.0% y/y in March to 24.5% in April.”

RBC argues the sales-to-listings figures are consistent with Ontario’s latest housing plan, announced on April 20.

If the trend continues, it argues, the next step would be cooling home prices in the next few months.

RBC views these developments as positive; investors in Toronto, perhaps, may not share the bank’s pleasure.

The Toronto Real Estate Board, meanwhile, isn’t ready to announce the housing plan a success.

"The fact that we experienced extremely strong growth in new listings in April means that buyers benefitted from considerably more choice in the marketplace,” TREB President Larry Cerqua said. “It is too early to tell whether the increase in new listings was simply due to households reacting to the strong double-digit price growth reported over the past year or if some of the increase was also a reaction to the Ontario Government's recently announced Fair Housing Plan."

Vancouver

Across the country, meanwhile, tightened supply is driving Vancouver prices up once again.

“April sales were still significantly below year-ago levels (-25.7%) but not as much as in March (-37.0%) which implies some m/m increase from March to April,” RBC said. “On the supply side, new listings were down 19.9% in April from a year ago, also less than in March (-27.3%). Back of the envelope math suggests an increase in the sales-to-new listings ratio from 0.70 in March to 0.75 in April—even deeper into sellers’ market territory.”

The benchmark price for homes in Vancouver is $941,100, which is up 11.4% year-over-year.

“Home buyers are looking to get into the market and they’re facing fierce competition,” Jill Oudil, Real Estate Board of Greater Vancouver (REBGV) president, said.

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COMMENTS

  • by 2017-05-08 11:10:28 AM

    If real local buyers are driving the market then so be it. I believe that any non resident buyer is a speculator and there too many create a bubble.
    I only wish Victoria BC had introduced a non residence tax but has not.

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