Vancouver Home Sales Crash 40%, As Toronto Home Prices Soar 22%

Tyler Durden's picture

What a difference a year makes.

In January of 2016 horror stories were beginning to emerge about what would soon be confirmed as the biggest housing bubble in Canadian history, courtesy of a massive flood of Chinese "hot money" flooding into  Vancouver, which quickly became one of world’s hottest housing markets. As Bloomberg writes, buyers turned up throughout the winter for bidding wars and sales reached an all-time high. Fast forward to last week, when the Real Estate Board of Greater Vancouver reported transactions in Metro Vancouver plunged 40% in January over a year earlier, and down 11.1% relative to December, as both buyers and sellers continue to sit on the amid confusion over whether the recent price gains will continue or whether the bubble has - as we reported last summer - finally burst.

That’s the seventh straight month of declines, according to data
compiled by Bloomberg, and January's sales were 10.3% below the 10-year average for the month. The ratio of sales to listings - used by the
industry as a harbinger of prices - is also at a two-year low, according
to the board.

And while transactions remain in free fall, prices have still to materially correct, with benchmark home prices up 15.6% in January from a year ago.  The average benchmark selling price of a single-family detached home in the Greater Vancouver Area rose 15.8% y/y to C$1,474,800.

The slowdown is hitting the market for single-family detached homes the hardest. Prices last year had been rising in double digits at this time. In the past six months, they’ve fallen 6.6% to C$1.47 million ($1.13 million), and a 0.6% drop compared to December 2016.

As BBG adds, in September, Vancouver topped a list by UBS Group AG of global cities most at-risk of a housing bubble. Since then, predictions of a downturn in Canada’s priciest real-estate market appear to be materializing after a 15% tax on foreign buyers in August and tighter mortgage rules from the federal government in October. Home prices in the Greater Vancouver region are headed for an 8.5 percent drop this year, Royal LePage forecast last month.

“It’s a lukewarm start to the year,” Dan Morrison, the board’s president, said in the statement. “Home buyers and sellers are more reluctant to engage so far in 2017.”

And while the future of the Vancouver housing bubble remains still in limbo, there are no such concerns about Toronto home prices, which rose more than 20% for the fifth straight month as buyers contended with a shrinking supply of properties on the market. The average home price in Canada’s biggest city jumped 22% to C$770,745 ($591,697) in January from a year earlier, according to the city’s real estate board, and sales climbed 12 percent to 5,188 deals Bloomberg reported. The number of active listings was half the year-earlier figure, and the average days on the market fell to 19 from 29.

“As we move through 2017, we expect the demand for ownership housing to remain strong, including demand from first-time buyers,” Larry Cerqua, president of the real estate board, said in a statement. “However, many of these would-be buyers will have problems finding a home that meets their needs in a market with very little inventory.”

What may be most interesting is that at current run-rates, the two housing markets may soon hit an inflection point, where the average Toronto home costs more than its Vancouver peer: the price for an average detached home in downtown Toronto was C$1.34 million and rising at a bubbly 22% pace, which is rapidly approaching the C$1.5 million average price in Vancouver, and falling. Housing in the western city has cooled, with a foreign-investor tax and escalated prices keeping many buyers on the sidelines, which prompted many foreign buyers to shift to Toronto, as we cautioned in September, and as the data now confirms.

 

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bamawatson's picture

home prices sore

Looney's picture

 

Not to yank our Canadian Cousins’ chain, but…

Their government seems to be willing to offer Toronto to ISIS as the new Capital, in case Trump and Putin kick those out of Raqqa.  ;-)

Looney

CheapBastard's picture

The Caliphate leaders will summer in Toronto and still winter in the cozy 145 degree desert.

Direct Flights from Riyadh to Toronto and convenient EZ-Camel-Storage facilities near the Riyadh airpot.

auricle's picture

The selling out of a nation by it's beaurocrats and complacent citizens.

chumbawamba's picture

Let me guess: most of the buyers have names that are spelled like the sound of silverware being dropped?

I am Chumbawamba.

sun tzu's picture

Their names don't sound like bombs going off

chumbawamba's picture

That's very Zach de la Rocha ala RATM of you.

-chumblez.

Zer0head's picture

not to worry

Justin Trudeau's less than subtle "diversity is us" fuck you to Donald will take care of Toronto's and what is left of Vancouver's housing markets as el Presidente takes out his Judge Robarts frustration on his socialist neighbor to the north

balolalo's picture

Follow that bubble.

Follow that bubble. 

dear god, at all costs, follow that bubble.

The Real Tony's picture

All the buyers are Chinese, no one else can afford a house.

AVmaster's picture

In the name of da childrens!

sagramore's picture

torontoimprovementplan.jpg

Good.  Two cities I want nothing to do with.

 

Raffie's picture

Musical money.

When the music stops you best have your money in hand.

 

BigCumulusClouds's picture

I think Gold and Silver prices are going to soar this month. It will help Vancouver but will not stop the bursting bubble.

Seasmoke's picture

Bush is looking worse than Vancouver housing.

CheapBastard's picture

Taxing foreign owned property will be a nice revenue stream for Canadians and Uncle Sam when it is finally passed nationwide.

auricle's picture

selling out your nation for some tax dollars has been the model for at least 60 years. In the beginning it wasn't very prevelant and there was plenty of real estate available to locals and foreigners. Now that we are 60 years deap into this process, citizens are finding it hard to afford real estate in their towns. That's tragic and sad. 

pitz's picture

Foreign owned property in Canada is almost non-existent.

JoJo Kracko's picture

I know you are trying to tell the Vancouver vs Toronto story, but it would be nice to see a few other capital cities tossed in to represent the rest of the Canadian market.   Edmonton, Regina, Winnipeg, etc.

asteroids's picture

Prices in Toronto are stupid. They either fall to match US equivalents or the Looney crashes. If interest rates rise then Canadian banks are an obvious short. In either case, it'll take a generation to work off this insanity.

pitz's picture

The loonie is likely to rocket to the moon as the debt associated with housing crushes Canadian consumer spending. 

Canada's bubble is based on leverage used by domestic actors and actresses.  Nothing more, nothing less.

Subprime lending in Canada is ubiquitous, and is government sponsored in a way, through the CMHC, that only the housing hucksters could have dreamt in their wildest dreams in the USA circa 2003-2007. 

The Real Tony's picture

The opposite is true the loonie will crash and burn to 50 cents U.S. or lower as Poloz lowers the Bank Of Canada rate into negative territory once the housing bubble starts to burst in Toronto and the Greater Toronto area. He doesn't want the Pakis in Brampton to lose all their homes and all the illegals in the basements to have to sleep on the sidewalks. This will only affect variable rate mortgage not fixed rate mortgages.

northern vigor's picture

I presume  that every major nuclear armed country has a nuke with Toronto's coordinates on it. The place is full of pompous, self important liberals that think they are the center of the universe. I strongly suggest nuking them so they stop pissing on everyone.

Savvy's picture

I'm Canadian and +1 this comment.

squid's picture

Well... funy you should mention that...

Toronto, the centre of the universe, is known as PIG-TOWN or CABBAGE-TOWN in the rest of Canada.

 

The sun revovles around Toronto, didn't you know.

 

And the real scandle.....

They havent wont he stanley cup since 1967.

 

Squid

crakerman's picture

Im in Vancouver and i agree

Arrow4Truth's picture

lol. Always thought the U$ should invade Canada. No offense Savvy.

Herdee's picture

Mark Carney was good at creating the housing bubble in Canada, in fact the X-Goldmanite went to England and did the same bubble real estate scam economics there as well.

Bunga Bunga's picture

Don't worry, it's because of low inventory, sellers don't sell because prices will go up,up,up.

Mahatma Coat's picture

The Chinese have a private joke about the gullibility of Canadians.  Canada is 'Jianada' in Chinese.  If you swap a couple of sounds around you can make a pun 'Dajia na', which means 'everyone take a piece'.

Put the two together and the full joke becomes 'Jianada: dajia na'.  Or 'Canada: everyone welcome to take a slice'.  

GoldenDonuts's picture

Sure we will do the same as the US did to the Japanese in the 80's and 90's  Take their money and then wait for the inevitable turn.

Xena fobe's picture

If the snowflakes only knew, they might quit defending them. 

quax's picture

The joke is on them because surveys of recent Canadian immigrants show that they quickly become staunch Canadian patriots. And why wouldn't they. Do you feel any particular attachment to wherever your ancestors came from?

https://canadiancitizenshiptestonline.ca/news/immigrants-to-canada-feel-...

Dark Daze's picture
Dark Daze (not verified) Mahatma Coat Feb 5, 2017 10:27 PM

Hate to tell you, but we have a lot of sluces, for the right price, and the right peopke.

Xena fobe's picture

Need to ban foreign residential RE investment. 

pitz's picture

Why?  Its almost non-existent now.  Do you want Canadians to be forced to dump their offshore properties for nothing when such a reciprocal ban is implemented by foreign nations? 

Inzidious's picture

That you are trolling is obvious, the question is why? It's no coincidence Vancouver real estate radically changed when they passed the foreign transfers tax, so ... Really?

Are you a home owner there who hopes prices won't tank? What other motivation could you have for being so wrong and posting about it?

pitz's picture

Just looking at the data.  I don't have a financial interest in Vancouver RE, although it is a nice place to visit and I visit often.

friendly manitoba's picture

silly headline.

prices are up 15% - says so in the article ...

volume is down as they announced new taxes for vacant condos and a tax on asian purchases of 10%. - a bunch of deals were made ... and it takes awhile for new buyers to show - throw in a bit of a scare by china investigating purchases in vancouver as tax evasion

a 1200 sf condo on False creek is still $1.4 mil. Same with a house in Langley

there are the usual 8000 listings. all but 300 above $300,000 - 2000 of which are $1 mil to $2 mil and another 2000 above $2 mil - highest about $40 mil for 8000 sf condo or 25,000 sf shack

crash my ass

in winnipeg houses are $300,000 to $600,000 with 200 $800,000 to $3 million - prices fairly stable for 5 years after doubling the previous 10 years - figure taxes at 1% per year , insurance .5% per year

if a canadian bought in phx 10. -15 years ago they are just getting their money back as the exchange at .76. helps.

a few who bought 2008 are up - but not if they renovated

lots of exceptions. - im just talking generally

so be careful banning foreign residential sales. - the snowbirds in FL are already paying $7000 insurance ... naples a condo is $25,000 a year mtce and golf - for 3 months use - and bighorn Palm Desertis $50,000 - $100,000 a year oper costs for 3 months - hardly a sellers market

id bet a hun on fallcons if you give me 8 pts.

847328_3527's picture

How is Calgary doing? it may be the exception, ie doing exceptionally poorly due to the energy bust like Houston is.

pitz's picture

Down 20-30% from the 2011 peak. 

The Real Tony's picture

Calgary is down about 20 to 25 percent from the October 2014 peak. Edmonton is down about half that. Fort McMurray is down about 40 percent from the October 2014 peak.

pitz's picture

Calgary peaked far before that. 

Déjà view's picture

Calgary...Chinese creating another 'Stampede'...

pitz's picture

I think you've been drinking the Realtor Kool Aid.

Quantum Bunk's picture

It takes long for the reality of big bubble bursts to bite. People are still under delusion as they try and gun the price higher. But it cant budge. Zerohedge is just rightly pointing out, that the top is in and the wipeout is underway

pitz's picture

The top was in over 3 years ago.