TorontoRealtyBlog

What were you doing in February of 2014?

No.  Seriously.  I’m asking.

A friend of mine told me this week, “You seem really caught up on age lately.”

I asked him to define “lately” and he paused, pondered, and said, “I mean, maybe the last couple of years, now that I think about it.”

Damn.  It’s true what they say.  Life does change after 40…

February of 2014 wasn’t that long ago.

Barack Obama was President.  Stephen Harper was Prime Minister.

Pharell Williams sang “Happy” and Meghan Trainor taught us “All About That Bass.”

The Olympics were held in Sochi, Russia, but it would take some time for us to learn what an advanced doping system the Russians had implemented!

The Toronto Maple Leafs were led by Phil Kessel, James Van Riemsdyk, Tyler Bozak, Joffrey Lupul, et al, in one of the worst periods for the franchise in my lifetime.

I had only been married for eight months!  I was such a pup!

Ten years, eh?

While it’s been said that anxiety is always looking forward, depression is always looking back, and mindfulness is being in the present, I wanted to take a look today at Canadian real estate prices over the last decade.

Why now?

Well, for starters, it’s as good a time as any!

But also because we continue to sit on the precipice of real estate disaster in this country, as our leaders constantly lament housing prices, and yet have not demonstrated anything close to a solution.  We have also watched the Canadian population swell from around 35.4 Million in 2014 to close to 40 Million this year.  We’ve endured a worldwide pandemic, we’ve witnessed a new “work-from-home movement” that changed how many people live, and we’ve seen a tremendous number of people move out of major cities, only to witness many more move back in.

If you’re an amateur real estate enthusiast, you might also spend time looking at real estate prices outside of Toronto, or even outside of Canada.

You might look at what a house costs in Shinjuku, Tokyo.  Or you might look at real estate prices in Nashville, Tennessee.

But how much properties cost is just as important as how much prices have risen.

So today, let’s use the CREA HPI (home price index), which tracks prices in sixty areas, nine of which are provinces, and fifty-one of which are cities or residential areas.

Keep that in mind: 51 cities or areas.

Here are some very preliminary notes about these 51 areas:

-There is no area where the HPI has declined in the last decade.

-The lowest of the fifty-one areas is an increase of 5.2%

-The highest of the fifty-one areas an increase of 220.4%

-35 of the 51 areas saw an increase of 100.0% or more

-The average of the 51 areas is a 109.1% increase

That’s merely for initial context.

But first, let’s look at the nine provinces:

Interstingly, CREA doesn’t track Manitoba.  Don’t ask me why.  But CREA also doesn’t track Yukon, Northwest Territories, or Nunavut, and I suppose I understand that.

A first glance at the chart above might have you say, “Yeah, okay, so Ontario and B.C. are in the top four, that makes sense.”

But Prince Edward Island is atop the list?  Really?

And Newfoundland & Labradour is at the bottom?

On the one hand, I would be surprised to see an eastern province sitting at an increase of 137.4% while another eastern province sits at a mere 9.3%.

On the other hand, Prince Edward Island is a boon for tourism and second homes.  That’s not to say that Newfoundland isn’t, but rather I would think most Canadians looking for vacation homes out east are looking in PEI and Nova Scotia, which happen to be in very close proximity to one-another.

Those less-informed (like myself, on a bad day…) merely assume that “all those provinces out east” are tied together, but one glance at a map shows you that Newfoundland & Labradour is east of the northern-most section of Quebec.

I can see why Newfoundland isn’t getting as much love.

As for Saskatchewan, can we make uninformed assumptions here?  Regina.  Alright.  Saskatoon.  Sure.  But what else is happening out there?  It’s not where you might think real estate prices are skyrocketing, is it?

What did surprise me was seeing Alberta at a mere 26.5% increase over ten years.  We all know that the province, jobs, and real estate prices revolve heavily around the health of the oil industry, which has had its ups and downs over a decade.  But if we adjusted for inflation, how would this look?

Um, let me do that…

These rates are added and not compounded, but you get the idea.

Adjusted for inflation, it would seem that real estate prices are more affordable in Alberta than they are today.

However, if we look at major Canadian cities out west, say, Calgary, Edmonton, and Winnipeg, what would you expect to see?

Here’s the fun part – the conclusion that you might draw from looking at a graph versus a chart could be different.  It certainly was for me.

Here’s the graph:

Prices in these cities more-or-less moved in tandem from 2014 through 2018, but whereas Winnipeg saw an increase in 2018 and 2019, Calgary saw a decline.

However, if you look at prices from 2023 onward, you can see that Calgary is trending upwards while Edmonton and Winnipeg are more or less flat.

To me, it look like Calgary saw the largest gain.

But here’s how the prices actually play out, and let’s add in Saskatchewan just for fun:

Winnipeg trumps Calgary, although not by much.

Calgary has seen a renaissance in the past 18 months, but prices in Winnipeg were so low to begin with that the slow-and-steady climb looks unspectacular on a graph, but is actually quite substantial in practice.

Of course, none of these numbers are “substantial” in the context of the fifty-one areas that CREA tracks.

The last column there – Rank – refers to the area’s rank out of fifty-one.

Regina is dead last at 5.2%, and yes, that’s the mystery city that I noted above in our preliminary notes.

But isn’t it fascinating that these five areas make up 5/6 of the lowest of the fifty-one areas tracked?

Which one is missing from that data set?  #49?

Well, let’s look at cities out east now…

There’s #49, in case you were wondering.

St. John’s, Newfoundland.  Not to be confused with St. John or Saint John, New Brunswick.

But what’s so interesting to note here is that #49 on the list is a city that’s only seen a 10.6% increase in the Home Price Index in the last ten years, but a mere five places up on that list, at #44, is a city that’s seen its HPI increase by 66.7%.

That shows you just how few of the fifty-one cities that we monitor have seen an increase in HPI of less than 60-70% in the last decade.

So what’s at the top of this list?

Is it cities in British Columbia, you’re asking?  That must be it, right?  All that west-coast money?

Well, yes and no…

Alright, now we’re onto something!

The seven areas in British Columbia that the CREA HPI tracks have seen ten-year increases between 75% – 147%.

That’s a great floor at 74.9%.  And amazingly, 74.9% ranks 42nd out of 51 cities!

But how is 146.8% only 16th on the list?

What in the world is happening?

What could possibly be in the first fifteen places on the list?

Wait…..is it Quebec?

Nope!

Although a “top-twenty” is nothing to sneeze at.

Interesting to see Montreal “only” up 86.7%, but while it’s not the number itself that’s surprising (since an 86.7% increase in ten years should be considered exceptional anywhere in the world) it’s the fact that Montreal is 38th out of 51 areas.

In case you haven’t noticed, we’ve left one province out thus far.  But that’s not by design, I swear.  I didn’t plan this out; it just sort of started with the cities in the midwest, then took a turn to the east coast, and before I knew it, I’d created this big “reveal” of sorts.

Yes, Ontario is the ticket.

In fact, the first fifteen cities out of fifty-one area ALL from Ontario:

Excuse the large chart, and apologies if this doesn’t display well on your phone.

But there are fifteen areas in Ontario that have seen a 150%+ increase in the CREA HPI in the last decade.

Not only that, 24/28 areas in Ontario have seen a 100%+ increase.

I mean, The Soo?  Really?  I have clients who are from The Soo and they trash-talk it all the time, while simultaneously browsing real estate listings because they dream of moving back!  But The Soo has increased by 85.3% in the last ten years.  What does that tell you about real estate in Ontario, let alone in Canada?

Now, just for fun, I want to compare #1 on the list to #51 on the list.

Bancroft versus Regina.

Look at where things started:

And look how things went over the next decade:

Much of the gain in the Bancroft & Area region seems to correspond with the 2020 COVID pandemic, and that’s a common theme with many of these areas in Southern Ontario.

There has to be a reason why the top fifteen areas on our list of fifty-one are all from Southern Ontario, and amazingly, Mississauga and the Greater Toronto Area rank 25th and 26th respectively.

In summary, I suppose rather than providing a conclusion or an opinion of my own, I want to ask the readers:

Is this normal?

I suppose we could spend days debating the definition of “normal.” B

But essentially what I’m asking is whether or not real estate prices doubling every decade is what you would expect to find in any other country in the world?

Is this sustainable?

Does this speak to where our country is headed?

Riddle me that, folks…

The post Canadian Real Estate Prices: A 10-Year Look! appeared first on Toronto Realty Blog.