The rate at which Canadian real estate prices have grown dwarfs even the frothiest of U.S. cities. This articles compares the home price growth in Canada’s 3 largest cities (Toronto, Vancouver & Montreal) with San Francisco, Los Angeles, New York City & Seattle. The findings are amazing, to say the least.
This analysis looks at:
- home price growth in Canadian and U.S. cities, using two home price indexes:
- the Case-Shiller Home Price Index (CS HPI) for U.S. prices, and
- the Teranet-National Bank of Canada House Price Index (TNB HPI) (which is modeled after the CS HPI) for Canadian prices
- the percent change from the year 2000 instead of comparing direct prices…
- the 3 largest markets in Canada – Toronto, Montreal & Vancouver and
- San Francisco, Los Angeles, New York City (NYC), and Seattle.
- The first two are being used because UBS ranked them as bubble cities, with unsustainable price growth.
- NYC and Seattle are included because people in Toronto and Vancouver like to compare their cities to those, respectively. NYC and Seattle are both also considered to be high price growth markets.
Canadian Real Estate Price Growth Is Absurd Compared To The U.S.
Since 2000, Canadian cities have experienced absurd price growth [compared] to major U.S. “bubble” cities.
- Toronto real estate prices have increased 239.9% as of March 2019, when compared to prices in 2000.
- Montreal real estate prices have increased a more modest, but still large, 189.08% over the same period.
- Vancouver real estate prices increased a whopping 315.58%.
The numbers above and below are inflation adjusted.
Toronto Real Estate Price Growth Compared To Major U.S. “bubble” Cities
UBS ranks Toronto as having the third fastest real estate prices in the world, just behind Hong Kong and Munich.. Price growth in Toronto was:
- 33.67% faster than in Los Angeles, when measured from January 2000 until March 2019,
- 45.27% faster than prices in San Francisco,
- 61.01% faster than they did in Seattle,
- 133.39% faster than in New York City during the same period.
Vancouver Real Estate Price Growth Compared To Major U.S. “bubble” Cities
Few places in history have ever seen real estate prices grow as quickly as they did in Vancouver. Vancouver real estate prices grew:
- 75% faster than those in Los Angeles, when measured from January 2000 until March 2019,
- 91.10% faster than they did in San Francisco,
- 111.81% faster than in Seattle and
- 207.02 % faster in New York City during the same period.
UBS listed Vancouver just under Toronto on their bubble index, and you can see why from the above numbers.
Montreal Real Estate Price Growth Compared To Major U.S. “bubble” Cities
Relative to Toronto and Vancouver, Montreal real estate prices are making a relatively stable move. Montreal real estate prices grew:
- 5.43% faster than Los Angeles prices, when measured from January 2000 until March 2019,
- 14.50% faster than in San Francisco,
- 26.90% faster than they did in Seattle, and
- 83.95% faster than New York City during the same period.
Montreal did not make any of the bubble lists, and prices grew at less than half the pace of a typical Canadian city over the past 5 years.
Residential investment represents just under 8% of GDP in Canada, almost twice that of the U.S.. This means the business of buying and selling real estate is very important to Canada – so important, in fact, that high prices are needed to continue to drive producer incentive to build.
- When prices fall, so does the supply developers are willing to build – as Vancouver is seeing.
- Consequently, the Canadian government has been willing to inject money to prop up prices, and turn a blind eye to billions in questionable purchases in Toronto and Vancouver.