COMPARE VANCOUVER & TORONTO HOUSING of Single Family Detached, Town House and Condo Prices and Total Residential Listings and Sales and their Absorption Rates
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The chart above shows the HPI® prices for Vancouver and average prices for Toronto (solid plot lines) as well as the Monthly Absorption Rate (MAR = Sales/Listings as dotted plot lines).
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At the old Vancouver price peak in April 2012 before Torontonians joined the party, Vancouver metro SFDs were 64% more expensive than Toronto comparables. In July 2016 at the peak of Vancouver SFD prices, they were 65% more expensive. By June 2017 the gap was closing quickly; it narrowed down to 33%. |
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The SFD price gap still remains wide at 50%. Strata prices are also more expensive in Vancouver; 19% more for town-houses and 12% more for condos.
In March 2017 the Monthly Absorption Rate based on total inventory and total residential sales hit 154% in Toronto vs Vancouver at 47%.
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In April 2019
HIGHER PRICES 50% more for a SFD in VAN 19% more for a Town House in VAN 12% more for a Condo in VAN 1.3 more Listings in TOR than VAN 4.9 x more Sales in TOR than VAN Monthly Absorption Rate TOR:VAN = 4 Ratio of SFD to Strata 1 VAN SFD = 1.8 VAN Town Houses 1 TOR SFD = 1.6 TOR Town Houses 1 VAN SFD = 2.2 VAN Condos 1 TOR SFD = 1.7 TOR Condos 10 Year SFD Inflation Rate: VAN = 111% and TOR = 114% Annual Precipitation VAN:TOR = 2:1 |
FEB 2019 Average Earnings
BC = $50,398 /yr up 23% since MAR 2009 ON = $53,349 /yr up 24% since MAR 2009 2016 Census Household Median Earnings VAN = $88,000/yr and TOR = $88,170/yr MAR 2019 Unemployment Rate Not Seasonally Adjusted (NSA) BC = 4.8% and VAN = 4.9% ON = 5.9% and TOR = 6.6% FEB 2019 Employment Rate (NSA) Charts BC = 62.0% and VAN = 64.8% ON = 60.4% and TOR = 61.6% Population 2016 Census Projection VAN = 2.46 mil or 1004 /Km2 TOR = 5.93 mil or 855 /Km2 Earners needed to buy an average SFD: VAN = 3 and TOR = 2 earners (based on 2016 StatsCan Census Median Household Income) |
Here is another attempt to visualize the distortions of the market where the fundamental requirement of a yield to attract sustainable investment in real estate has been replaced with the lure of capital gains.
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The "improvement" that sits on the land is a wasting asset. If serviced land is so valuable, shouldn't the ratio be 1 house equals at least 3 townhouses?
If the numbers don't make sense you can always rent. When MOI is low & MAR is high, developers and vendors have the edge.
If the numbers don't make sense you can always rent. When MOI is low & MAR is high, developers and vendors have the edge.
CLICK CHART TO ENLARGE
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IN THE LAST 10 YEARS SFD Prices are up: 111% in Vancouver 28% in Calgary 114% in Toronto WHILE Employment Earnings are up: 21% in British Columbia 24% in Alberta 24% in Ontario |
Flipping Real Estate is Not Productive
When the housing price correction comes and construction labourers get laid off along with everyone marginally connected to the FIRE sector (finance, insurance, real estate), there will not be enough service employment (currently +/-70% of our economy) to fill the demand for earnings to pay for mortgage debt that suddenly becomes the biggest number in one's net worth statement.
Mitchell Anderson writing for TheTyee.ca on JAN 30, 2017 makes the observation that:
Whether we like it or not, B.C. has basically become a real estate economy. The BC Assessment office recently released numbers for 2017 showing that property values ballooned by a staggering $332 billion — 25 per cent — last year (BC Assessment Roll Growth Chart). This figure is more than five times the economic value of all goods-producing industries in 2015 combined and nearly double the size of our entire service sector that same year. (BC Government Financial and Economic Review 2016)
Not surprisingly, 90 per cent of the increased values from last year’s property gold rush were in the urban land bubble in the Lower Mainland, which increased by $298 billion in 2016 (Province-Wide Property Assessments Released JAN 3, 2017). Real estate inflation within this tiny area, representing just two per cent of B.C.’s land area, eclipsed the entire provincial GDP — the actual goods and services produced by all British Columbians in 2015. Mitchell Anderson JAN 30, 2017 TheTyee.ca
