Canada

Canadian Home Prices Grew Faster When Located Further From City Center

Canadian real estate markets are placing a big premium on living further from the city. Bank of Canada (BoC) found city centers showed the smallest annual price growth in Q4 2020. Home prices generally saw larger growth further from the city, as people flee the centers for more space.

Greater Toronto Real Estate Prices Climbed Much Faster Outside of The City 

Greater Toronto real estate prices increased a lot more outside of the city. Less than one kilometer from the city center, home prices were down 1.86% compared to a year before. Once you get 30 kilometers outside of the center, double-digit growth becomes the norm. The last plot on the chart, over 64 kilometers away, was up over 19%. Looking at the trendline, the path is a lot more clear.

Toronto Real Estate Prices From City Center

The annual percent change in Toronto home prices, by the distance from the city center.
Source: BoC; Teranet; Better Dwelling.

Vancouver Real Estate Prices Grew Much Faster Away From The City, Just Not Too Far

Vancouver experienced a similar trend, with only the city center showing negative growth. Less than one kilometer from the city center, home prices fell 1.26% from a year before. Once you get between 40 and 60 kilometers from the city center, growth is consistently higher. That appears to be the sweet spot since it falls as you get further than that. The trend is still very much intact though.  

Vancouver Real Estate Prices From City Center

The annual percent change in Vancouver home prices, by the distance from the city center.
Source: BoC; Teranet; Better Dwelling.

Montreal Real Estate Prices Showed Big Growth Everywhere, But 2x In The Burbs

Montreal real estate saw large growth everywhere, but it was 2x as large outside the city. Within two kilometers of the city center, home prices increased between 8% and 9%. Once you get past 6 kilometers, double-digit growth becomes a consistent pattern. The further out, the higher the trend generally. 

Montreal Real Estate Prices From City Center

The annual percent change in Montreal home prices, by the distance from the city center.
Source: BoC; Teranet; Better Dwelling.

Ottawa Real Estate Grew Up To 2x Faster In The Suburbs

Greater Ottawa…. is tiny, and it’s unclear why it would be contrasted with the other regions. However, these few data points show it experienced a similar trend. Home prices less than 3 kilometers experienced prices about 10% higher than last year. After that, home prices generally increased in the 20% range. They generally trend higher further from the city.

Ottawa Real Estate Prices From City Center

The annual percent change in Ottawa home prices, by the distance from the city center.
Source: BoC; Teranet; Better Dwelling.

There were a few factors driving these trends — space, affordability, and work-from-home. As more people spend time in the house, and need home offices, people hunt down bigger properties. Since those are really pricey in the city, more people fled to find suburban detached homes.

None of this would have been possible without work-from-home. However, the suburbs are more expensive, on the bet work-from-home is a permanent change. The city is still expensive because people think work-from-home is temporary. One market is mispriced, but we won’t find out which one until the economy is well into its recovery.

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3 Comments

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  • Jamie 4 months ago

    Peak froth behavior. Doesn’t matter where, it’s just cheaper than Toronto!

  • Theo H 4 months ago

    Either means no commutes, or transit gets a lot more crammed. Will be fun to find out!

  • Rafiq Iskandar 4 months ago

    It was population growth. Then it was density. Then it was just… uh, in the country? Makes sense. Keep spinning the narratives, Realtors.

    The fact is people will spend whatever they can, if they think the prospect of losing money doesn’t exist.

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