CANADA’S HOUSING MARKET | January 7, 2020
1
January 7, 2020
Toronto housing market became more expensive, Vancouver more active in December
2019 ended on a much stronger note than it started for two of Canada’s largest housing markets. Early real estate board-level results
showed December home resales rising well above year-ago levels in both the Toronto (up 17.4%) and Vancouver (up 88.1%) areas.
This marked an impressive turnaround from the very weak conditions prevailing at the start of 2019. There ’s been increasing evidence
since then that buyers have adjusted to earlier policy changes—including the mortgage stress test. Modest declines in mortgage rates
over the first half of the year also helped spur demand. The bigger issue now is low inventories. Very tight demand-supply conditions
in December have led to the strongest rise in property values (+7.3% year-over-year) in Toronto since November 2017. Vancouver’s
benchmark price was still down from a year ago (-3.1% in December) but not for much longer—it’s been rising month-over-month over
the last five months. Reports from other real estate boards point to generally solid results in December. Home resales rose from a
year ago in Ottawa (up 15.3%), Edmonton (up 9.9%), Calgary (up 8.3%) and Victoria (up 7.2%). There were further signs that price
declines are easing gradually in Calgary and Edmonton.
The main story in the Toronto area throughout the fall of 2019 has been shrinking inventories. This was especially the case in Decem-
ber with new listings falling more than 18% from a year ago, and active listing plummeting 35%. The dearth of supply is making buy-
ers’ property search more challenging. Home resales have levelled off since September on a seasonally-adjusted basis despite de-
mand remaining strong. By our count, home resales fell by approximately 3% between November and December. Because new list-
0
5
10
15
20
25
30
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Unadjusted
Moving average
Thousand units, NSA
Active listings: Toronto area
Source: Toronto Real Estate Board, RBC Economics
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Seasonally ajusted
Toronto-area sales-to-new listings ratio
Source: CREA, RBC Economics
seller's market
buyer's market
balanced market
December
0
20
40
60
80
100
120
140
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Thousand units, seasonally ajusted annual rate
Toronto-area home resales
Source: CREA, RBC Economics
December
Robert Hogue
Senior Economist | 416-974-6192 | [email protected]
-20
-10
0
10
20
30
40
2013 2014 2015 2016 2017 2018 2019
Vancouver
Toronto
Year-over-year % change
MLS Home Price Index
Source: CREA, TREB, REBGV, RBC Economics
July 25, 2016: BC government announces 15% foreign buyer tax in Metro Vancouver, effective Aug. 2, 2016.
April 20, 2017: Ontario government announces housing action plan that includes a non-resident buyer tax of 15%
effective immediately.
February 26, 2018: BC budget announces rise in
foreign buyer tax to 20% and new
non-resident speculator tax.
January 1, 2018: OSFIimplements new B-20 guideline for mortgage lending
that calls for stress testing all new uninsured mortgages.
CANADA’S HOUSING MARKET | January 7, 2020
2
ings fell even more sharply during the month, demand-supply
conditions tightened further to a degree unseen since early-2017.
So it was no surprise that property values got hotter. In fact, odds
are they will continue to heat up at an accelerating rate in the
months ahead with sellers squarely in the driver’s seat.
The eye-catching, 88% y/y surge in home resales in the Vancou-
ver area in December says as much about the depth of the
slump in December 2018 as the current, more buoyant state of
affairs. A year ago, Vancouver’s market was fast approaching its
lowest point since the Great Recession, which set a very flattering
comparison basis. Still, confidence in the market clearly has re-
turned. All the recent policy and regulatory changes appear to be
in buyers’ rear view mirror now. We estimate home resales grew
for a sixth-straight month in December on a month-over-month basis, rising by more than 4.5% from November. New listings haven’t
kept up. The market balance is quickly shifting in favour of sellers. Home prices are poised to maintain an upward trajectory in the
period ahead—quite possibly rising above year-ago levels by the spring (or even earlier). After seeing some affordability reprieve over
the past couple of years, Vancouver buyers will again find harder to achieve their home ownership dream in 2020.
The material contained in this report is the property of Royal Bank of Canada and may not be reproduced in any way, in whole or in part, without ex-
press authorization of the copyright holder in writing. The statements and statistics contained herein have been prepared by RBC Economics Research
based on information from sources considered to be reliable. We make no representation or warranty, express or implied, as to its accuracy or com-
pleteness. This publication is for the information of investors and business persons and does not constitute an offer to sell or a solicitation to buy secu-
rities.
0
10
20
30
40
50
60
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Thousand units, SAAR
Home resales: Vancouver area
Source: CREA, RBC Economics
December
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019
Seasonally adjusted
Vancouver-area sales-to-new listings ratio
Source: CREA, RBC Economics
seller's market
buyer's market
balanced market
December
0
5
10
15
20
25
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Unadjusted
Moving average
Thousand units, not seasonally adjusted
Active listings: Metro Vancouver
Source: Greater Vancouver Real Estate Board, RBC Economics