Canadian homebuyers are paying large premiums to live in some cities. National Bank of Canada (NBC) data shows most cities are cheaper than the national home price in Q1 2021. Two big exceptions are Toronto and Vancouver, which fetch massive premiums. Let’s take a look at how much more people need to pay in contrast to the rest of the country’s urban markets.
Toronto Real Estate Fetches Up To A 30% Premium
Toronto homebuyers are paying a big premium compared to living in the rest of the country. Buying a single-family (non-condo) home is 30.2% more expensive than the price of a typical home in major cities. Condo apartments are only 2.2% more expensive than condos in other urban markets though.
Considering Toronto is such a large part of the index, it likely skews the whole thing higher. Before accounting for that, it’s a very substantial premium. If you compensate for the index weight, the gap between Toronto and a city like Montreal is even larger.
Condo prices are fairly close to the price of a condo in other parts of Canada. That may say more about the rest of Canada’s markets right now than it does about Toronto.
Canadian Home Buyer Price PremiumsThe percent difference in home prices compared to the urban composite index, which is the price of a typical home across Canada. Source: NBC; Better Dwelling.
Vancouver Real Estate Fetches Up To A 68% Premium
Vancouver homebuyers pay the largest premium compared to the national home price. Vancouver single-family homes are 68.2% more expensive than typical in Canada. Condo apartments are more modest at a 23.1% premium compared to the national urban condo index. It won’t surprise anyone in Vancouver, but it’s a heck of a premium if you’re moving from elsewhere.
Montreal Real Estate Is Up To 43% Cheaper Than The Rest of Canada
Big premiums to own in the largest cities aren’t the norm, as Montreal demonstrates. Montreal single-family homes are 43.4% cheaper than the national index price. As for condos, buyers pay a 6.7% premium compared to the price of urban condos across Canada. Single-family homes are a deal apparently, condo apartments — not so much.
Canada’s priciest real estate markets now require massive premiums to live in. As the price of real estate meets the trend of more flexible working conditions, that can change fast. At some point, the pain of paying high shelter costs can become greater than the pain of moving. If that happens, it doesn’t matter how many amenities a city has. New buyers would struggle to use them, since they’re sinking their whole pay into a mortgage.
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