{"id":19301,"date":"2022-02-03T11:11:00","date_gmt":"2022-02-03T19:11:00","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=19301"},"modified":"2022-02-02T11:31:58","modified_gmt":"2022-02-02T19:31:58","slug":"home-prices-gap-between-toronto-vancouver-has-narrowed","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2022\/02\/home-prices-gap-between-toronto-vancouver-has-narrowed\/","title":{"rendered":"Home Prices Gap Between Toronto &#038; Vancouver Has Narrowed"},"content":{"rendered":"<p style=\"text-align: justify;\">Between Canada\u2019s two most expensive cities, Vancouver has always outranked Toronto by a mile when it comes to home prices. Now, new data shows that the two markets are neck-and-neck, reporting the smallest home price gap in more than 30 years.<\/p>\n<p style=\"text-align: justify;\">A report published by TD Economics economist Rishi Sondhi today states that as of December 2021, the price of an average home in Toronto was only 4% less than the average property in Vancouver.<\/p>\n<p style=\"text-align: justify;\">Ontario\u2019s capital is not only vying for the title as the most expensive city in Canada, but the price gap between Toronto and Vancouver has narrowed to the tightest level since 1991. This underscores a \u201cmulti-year trend\u201d where Toronto\u2019s home price growth has outpaced Vancouver.<\/p>\n<p style=\"text-align: justify;\"><strong>Policy measures helped GTA home prices catch up<\/strong><\/p>\n<p style=\"text-align: justify;\">Sondhi points to a number of influences that have caused prices in the two major cities to grow closer.<\/p>\n<p style=\"text-align: justify;\">For one, government restrictions in the Greater Vancouver Area have been a \u201cbig factor,\u201d in shrinking the price gap in recent years. The imposition of a 15% foreign buyers tax in the GVA during August 2016, which coincided with \u201crunaway strength,\u201d in the Greater Toronto Area market, led to a \u201ctemporary price convergence\u201d in both markets during 2016 and 2017.<\/p>\n<p style=\"text-align: justify;\">A year later, GVA home prices took another hit thanks to more affordable housing policies, such as a hike to the foreign buyers tax and increases to land transfer and school rates on expensive homes. Meanwhile, Sondhi notes that there was a lighter touch to restrictions in the GTA.<\/p>\n<p style=\"text-align: justify;\">As a result, the GTA has seen home prices rise 40% since the end of 2018, while the GVA has reported only a 13% gain on property values during the same timeline.<\/p>\n<p style=\"text-align: justify;\">\u201cThese policy measures have generally targeted the higher-end of the GVA housing market, likely impeding sales growth in higher-valued homes,\u201d explained Sondhi in the report. \u201cThis, in turn, would have weighed on average home prices, given the shifting composition towards sales of more moderately priced dwellings.\u201d<\/p>\n<p style=\"text-align: justify;\">Sondhi also pointed out that the sale of homes valued at $2 million or more in the GVA dropped 10% in 2019 before increasing in 2020 and 2021. Although data gaps prevent \u201ca true comparison,\u201d between the GVA and GTA, the sales of GTA homes valued over $1 million have jumped 200% since the end of 2018, which is more than 120% recorded for the same home category in the GVA.<\/p>\n<p style=\"text-align: justify;\"><strong>Supply growth, new listings, impacting price growth<\/strong><\/p>\n<p style=\"text-align: justify;\">Heading into 2019, policy measures also left the GVA housing markets \u201cextremely oversupplied,\u201d relative to demand, Sondhi said.<\/p>\n<p style=\"text-align: justify;\">\u201cMarkets have generally remained comparatively loose in the GVA since then, muting home price growth,\u201d said Sondhi. \u201cThis gap has recently narrowed however, as GVA sales have outperformed. Both markets have benefitted from robust pandemic demand, but Vancouver has also been boosted by recovery from the restriction-driven slowdown in 2018.\u201d<\/p>\n<p style=\"text-align: justify;\">From 2019 to 2021, new listings in the GVA grew 16% versus 6% in the GTA. When it comes to new homes, the quantity of completions in Toronto fell in 2019 and have yet to return to 2018 levels. Meanwhile, completions have increased in the GVA on average between 2019 and 2021, \u201csuggesting some more supply relief has come in Vancouver.\u201d<\/p>\n<p style=\"text-align: justify;\">\u201cIt remains clear that robust price growth in Toronto has not stimulated a meaningful increase in supply,\u201d said Sondhi. \u201cIn fact, potential sellers who would be more active in \u2018normal\u2019 times may be holding back their listings due to a dearth of inventory to relocate to, and intense competition for available properties.\u201d<\/p>\n<p style=\"text-align: justify;\"><strong>Rate increases and home prices to influence price gap in 2022<\/strong><\/p>\n<p style=\"text-align: justify;\">Looking at early data, Sondhi suggests that the price gap between Vancouver and Toronto could continue to narrow as home prices in the GTA were up 30% on a three-month annualized basis versus 23% in the GVA.<\/p>\n<p style=\"text-align: justify;\">Ahead of the four interest rate hikes that TD Economics anticipates in 2022, this environment could cause lower homes and drop the sales-to-new listings ratio by the end of the year, Sondhi predicts.<\/p>\n<p style=\"text-align: justify;\">Following price increases of 18% and 12% in 2021, the GTA and GVA could see lesser gains of 9% and 5% this year. On a quarterly basis, however, \u201cmodest and similar price growth profiles\u201d are expected for both regions against tough affordability conditions, which would keep the price gap as-is. Lags in construction completion will bring \u201cmodest relief\u201d for new supply as housing starts cools but remain above long-term averages in 2022.<\/p>\n<p style=\"text-align: justify;\">Investor demand will also be an important factor to watch in the price gap, given that investors make up a slightly higher portion of the GTA market (24%) in comparison to the GVA (20%).<\/p>\n<p style=\"text-align: justify;\">\u201cInvestors are likely more sensitive to rising interest rates, meaning that the higher rates that we are expecting could put outsized downward pressure on sales and prices in the GTA, thus widening the price gap between the two jurisdictions this year,\u201d explains Sondhi.<\/p>\n<p style=\"text-align: justify;\"><a href=\"https:\/\/www.livabl.com\/2022\/01\/gap-toronto-vancouver-prices-1991-td-economics.html\" target=\"_blank\" rel=\"noopener\">Gap Between Toronto, Vancouver Home Prices Smallest Since 1991<\/a> by Michelle McNally | Livabl<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Between Canada\u2019s two most expensive cities, Vancouver has always outranked Toronto by a mile when it comes to home prices. Now, new data shows that the two markets are neck-and-neck, &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2022\/02\/home-prices-gap-between-toronto-vancouver-has-narrowed\/\">read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[],"class_list":["post-19301","post","type-post","status-publish","format-standard","hentry","category-market-updates"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Home Prices Gap Between Toronto &amp; Vancouver Has Narrowed &#8226; Rory C Real Estate | Oakwyn Realty<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.roryc.ca\/blog\/2022\/02\/home-prices-gap-between-toronto-vancouver-has-narrowed\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Home Prices Gap Between Toronto &amp; Vancouver Has Narrowed &#8226; Rory C Real Estate | Oakwyn Realty\" \/>\n<meta name=\"twitter:description\" content=\"Between Canada\u2019s two most expensive cities, Vancouver has always outranked Toronto by a mile when it comes to home prices. 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