Vancouver has long been the most expensive housing market in Canada, and for obvious reasons when you considerate the climate, scenery, and everything else that makes living in the city desirable for people. Naturally owning property becomes desirable too when there is such a level of widespread desire to be there, and one of the things that has always been an increasing factor in Vancouver is the geographical constraints of the area that prevent it from expanding the way other cities in North America do.
For as long back as memory will serve Toronto has been reliably coming in at #2 for expensive housing markets. One of the things that Toronto has had going for it that is better for housing availability and affordability is the ability to expand without those same geographical constraints. In many ways that is what has allowed the Golden Horseshoe to be what it is, but what is true is that the rate of development and the type of development that has been occurring in Toronto in more recent years has Toronto poised to overtake Vancouver as Canada’s most expensive housing market.
There are estimates that there are upwards of 40 000 realtors working in the GTA, and no doubt this news of a possible new #1 will sound just fine if you’re a well-established Toronto realtor. If you’re not that and perhaps new to the business it may be even more daunting to wonder how you’ll start to build you client base and get to that same level of being established in the business locally. That’s challenging for realtors in Toronto and Vancouver, but our online real estate lead generation system here at Real Estate Leads is ideal for giving you a genuine advantage when it comes to meeting prospective new clients.
So the question then is what’s pushing Toronto to potentially overtake Vancouver as the most expensive place to buy a home in Canada? That’s what we’ll focus on here this week.
Fast Narrowing Gap
If the quickly closing gap between average home prices in Canada’s two most expensive cities is any indication then Toronto is becoming very much like Vancouver. At least in relation to their stratospheric home prices if nothing else. As of December 2021, Greater Toronto Area home prices were only lagging behind those of Vancouver by about 4% and that works out to the smallest gap since 1991.
The two cities have gone back and forth being the most expensive cities for rent in Canada, and much of that can be attributed to Toronto being much more of a logical destination for young career professionals as well as the country’s number one destination for new immigrants. But one thing that is fully established now is that home prices in Toronto are rising significantly faster than those for Vancouver’s and there’s plenty of reason to believe that this multi-year trend is going to accelerate.
Contributing Factors
Lack of government restriction is a huge factor in this, as what is happening is home developers are building what is best for profits and not building the type of multi-family housing that Toronto needs. Homebuyers still need homes though, and they buy what is there to be had – in most of the cases, condominiums. Competition for condominium sales is a result of buyers buying what is available to them, but it creates a lot of problems for the housing market and does push up prices higher when the housing that is available doesn’t meet the needs of the buying collective.
Other factors are contributing too; immigration, demand outstripping supply, insufficient numbers of new housing starts, and rates of housing completion and ever-increasing investor interest. All of which has contributed to prices rising up a staggering 40% in the Greater Toronto Area since 2018. Over the same time the rise was just 13% for the same timeframe in Vancouver.
We also know that GVA home prices were dampened by additional policy measures meant to combat affordability challenges, including raising land transfer and school rates on highly expensive homes along with increasing the foreign buying tax rate. These measures have not been seen in Toronto the same extent, but it is reasonable to think they may be implemented eventually if Toronto’s market stays overheated for a long time in the same way Vancouver’s has.
The last thing to be said about this trend with rapidly increasing home prices in Toronto is that inventory levels do not go up even remotely in line with demand then this trend is sure to be even more pronounced in the near and long-term future.
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