Teranet: Toronto Real Estate Is Negative For The First Time Since 2009, Vancouver Still Soaring

Canadian real estate printed huge gains from last year, due mostly to condos. The Teranet National Bank of Canada House Price Index (Teranet HPI) is just a point below the all-time high. That was the good news. The bad news is price growth across Canada has decelerated for the longest period since 2008, with Toronto turning negative for the first time since 2009.

About The Teranet HPI

The Teranet HPI is mistakenly called a “lagging” indicator by agents, due to the use of transfer data. When your local board reports numbers, they use MLS sales information. The result is the prices Teranet uses have been agreed to up to 3 months before. On the other hand, Teranet only uses finished transactions. In a booming market, few sales fall through, so the MLS is a great measure. In a declining or cooling market, people start looking for ways out of sales, which make Teranet numbers interesting.

Quantity is another thing to note. The Teranet HPI includes all transfer data, not just sales done through the MLS. The result is Teranet has an estimated 20% more sales included, vs your local real estate board. If I told you 1 in 5 sales were excluded from stats, how would you feel about the numbers you just read? That’s why banks use Teranet.

Which should you be using? Neither number is better or worse than the other, just different. In a fast moving market, the MLS can give you a short term edge. In a slow moving market, the Teranet HPI is worth looking at. That said, short term gains that the MLS note are mostly useless. Homes are large assets, with high transaction costs and low liquidity. The usefulness of month-over-month data points is largely overstated. Now, onto the numbers.

Canadian Real Estate Prices Are Decelerating For The Longest Period Since 2008

The Composite 11, a weighted aggregate of all home types in Canada’s 11 largest cities, made a pretty big jump in May. The index saw home prices rise 1.02% from the month before, bringing prices 4.48% higher than last year. Prices are 0.6% below the peak obtained in August 2017, but things aren’t all rosy. Prices decelerated for 11 months in a row, the longest stretch since before the Great Recession.

Teranet-National Bank HPI C11 (Annual Change)

Composite aggregate of home prices in Canada’s 11 largest cities.

Source: National Bank of Canada, Teranet, Better Dwelling.

Toronto Real Estate Prices Go Negative For The First Time Since 2009

Toronto real estate had a big month, but due largely to what a National Bank analyst called a “tight” condo market. May’s prices were up 1.32% from the month before, outpacing the country. Despite the huge jump, annual price changes went negative for the first time since September 2009. Toronto is seeing the longest price growth deceleration in the whole data set going back to 1999.

Toronto Real Estate Prices (Teranet-National Bank HPI)

Annual percent change of real estate prices in Toronto.

Source: National Bank of Canada, Teranet, Better Dwelling.

Vancouver Real Estate Hits A New Record High

Vancouver real estate prices moved to a new high, due entirely to condos. The city saw a monthly price increase of 1.04% in May, bringing prices 15.42% higher than last year. An NBC analyst noted condos increased 17.5% annualized from September vs 4.9% for other housing types. It’s Vancouver, so the other home segment climb might seem small, but it’s actually a very large climb.

Vancouver Real Estate Prices (Teranet-National Bank HPI)

Annual percent change of real estate prices in Vancouver.

Source: National Bank of Canada, Teranet, Better Dwelling.

Montreal Real Estate Is Still The “Hot” Market That Barely Moves

Montreal real estate hit a new peak, but it’s doing so very slowly. Prices in May were up 0.31% from the month before, well below the national average. The gains add up to 3.65% from the year before, which is actually a very big climb. Just not when you’re viewing it in contrast to frothier markets like Toronto and Vancouver.

Montreal Real Estate Prices (Teranet-National Bank HPI)

Annual percent change of real estate prices in Montreal.

Source: National Bank of Canada, Teranet, Better Dwelling.

After a record run, it’s not unusual to see prices decelerate across the board. The increased focus on condo prices would be an encouraging trend, if you’ve never seen the loan numbers for condos in cities like Toronto. Nearly a third of buyers that took possession of a condo in Toronto last year are paying more than triple a typical variable rate. This means they’re either going to have a very difficult time breaking even if prices climb, or intend to hold for just a brief period and flip it back into the market. Speculative buyers are great, until they aren’t.

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  • BFB 6 years ago

    Since these include private sales, what is the likelihood that Vancouver is seeing foreign money pour through private sales to send these prices higher?

    It seems like sales are declining on the MLS, but prices are rising just as fast as when they were higher.

    • Bluetheimpala 6 years ago

      Blue rant! BC was the beginning of the funny money and it will be the end. Mark my words, the entire province will burn to the ground in the end. Beginning late last year chinese were ‘dumping real estate’ but to other chinese. We saw more marketing and also channel-partnerships between RE sites/brokerages here and overseas…once the low risk and easy yield of Canadian RE got too frothy the wealthy/influential opened it up to the masses. China is a two-tier system (maybe 10 tier depending on who you talk to). Insiders and Outsiders. Mainland chinese with no influence/connections are more comfortable buying from other Chinese so, and this is laughable, the wealthy chinese have two pops; sell to locals until they max it out and then find their ‘greater fool’ overseas…remember, there are very very rich chinese who are basically illiterate/uneducated. If someone more ‘knowledgeable’ tells them of a sure thing and how great Vancouver RE is, why not overpay to a)get you capital out (if you still can) and b)own in ‘the next london’. Also, there is a big cast/status culture there; if an influential person offers you a ‘big opportunity’ you better take it…my guess is whatever is going on is with money already here or the last of the money Xi is allowing out. Or not, whatever, I live in Toronto. BD4L.

      • Grizzly Gus 6 years ago

        A couple hundred million people who just entered the middle class in the last 15 years are about to go through their first credit cycle. What could go wrong?

        • Bluetheimpala 6 years ago

          Yeah, we all know how their foray into the stock + debt markets has panned out…lol.

  • Ian 6 years ago

    Winter is here.

  • Trader Jim 6 years ago

    So price growth moves with monetary policy? But real estate agents told us that only applies to other places with money, our maple syrup backed, chocolate filled gold coins are immune to this behavior.

    • Grizzly Gus 6 years ago

      Toronto homes are still cheap compared to charter cruise ships. Better buy today before its too late

      • SCE 6 years ago

        People will buy and losers on this site will be renters for life. I’m happy having people pay my mortgage.

        • Bluetheimpala 6 years ago

          I don’t hold anything against you and I appreciate insights from all facets of society. My 3 year old tells me all the time that jaguars are going to get me and while I tend to doubt him there is always a chance. I’ll give you the ‘jaguar odds’ on your prognosis. Thanks muffin. B4DL.

        • carlton 6 years ago

          Keeping buying it will always go up ! your a genius, all the publications are wrong, your right. Buy a couple just to show these loser renters how a boss does it.
          Your f#@ked! good luck!

  • Grizzly Gus 6 years ago

    Hey Potato chips! Missed ya, wondering if you have any digs on the GTA east side? Thinking next year I’ll be able to vultch a few properties from rent subsidizing commies like you…… sorry I mean investors.

    Also Im thinking about starting an annual “Toronto Real Estate Vulture Expo”. We will be featuring guest speakers like Sonia and her team from “Operation Repo”, Mike Tyson on How to Looth it All and many more. VIP tickets are normally $999.99 but if you buy today I can give it to you for $49.99. Just send over your credit card info, and you will be on your way to success!

  • Bluetheimpala 6 years ago

    Hello everyone: TheRedPin.com brokerages based out of Toronto is going belly up. The investors who purchased it see no future and are declaring bankruptcy on Monday. Agents have been told to take all their files and move brokerages immediately. Sales volumes start to plummet and a high profile discount brokerage folds. I’m not saying there is a connection buuuttt…
    “Hide ya wife, hide ya kids everyone is rapin’ up in her'”.

    • Bob123 6 years ago


      • Bluetheimpala 6 years ago

        Agents at the Redpin. Family member is an active agent and was called yesterday by a colleague. Colleague had been contacted by another broker asking if this person wanted to jump ship. Answer was ‘No, I’m happy’ and the broker basically replied ‘Really? Word on the street is you’re going bust’. RedPin agent confronted the Redpin sales/agent manager, Kyle, and he told her what I conveyed above. Get your clients/leads and get the fuck out. Wait for next week. Tick tock.

        • @xelan_gta 6 years ago

          Interesting insight, great job Blue.
          Well, with sales at 30% below 2017 no doubt all brokerages have at least 30% less revenue than last year. Last year was a record one but still not only homebuyers overleverage, sometimes business overleverage too.
          We’ll see in the coming weeks how that plays out.

          • marco 6 years ago

            Of the top 100 brokerage offices 86 are down in transaction volumes, some by as much as 80%. Back in the early 90’s we lost a lot of agents when the recession hit but then it was the interest rates. 2016 TREB had over 113k transactions, 2017 had 93k. With the new stress tests and fair housing plan I see transactions heading to mid 80k’s. That will continue to put pressure on brokerages who can’t innovate.

    • Mark Baum 6 years ago

      Wow big if confirmed!

      • Bluetheimpala 6 years ago

        Wait until next week. I’m only conveying what was told to me personally. Agents are already jumping ship…I doubt you can even do a deal there anymore.

        • Grizzly Gus 6 years ago

          Very interesting stuff. Looking forward to Monday

    • SCE 6 years ago

      Yet, mega online real estate site Zolo is coming to Canada!! Why aren’t you mentioning this? Why the one sided unverfied rumour. Hey look, I can do it to. I hear from my cousin’s cousin’s sister’s dog’s best friend cat friend’s owner that there’s going to be 189 new real estate companies starting ny all the people leaving your place next Tuesday.

      • RM 6 years ago

        Those are two different types of business. I’m not saying it’s insignificant that Zillow is coming to Canada but it’s not really comparable. One makes money from housing sales, the other from advertising.

  • Ken Wu 6 years ago

    Vancouver is FAR from soaring, with sales down over 50% across the board and prices dropping well into the red for detached houses. Even condo sales are down around 40%.

    The board created its frankenmonster price stat called the HPI, which bears no resemblance to the truth and is 100% subjective based on their own secret formula which the public has no access to.

    • Miao 6 years ago

      Except this isn’t the benchmark, it’s land registry data analysed by the National Bank. People looking for “crash” signs using false information are just as bad as people that pimp the market. It is what it is.

      Sales are down, but prices are higher. Buyers don’t need to sell at a lower price right now, because some idiot is paying that ticket. Less people are willing to, which is going to eventually lead to a loss. That just isn’t happening yet, even if you say it is.

      • carlton 6 years ago

        Why do bulls even come to this site? Genius its for Bears! Your talking trash my house is down over a hundred already. Why deny facts?

        “Less people are willing to, which is going to eventually lead to a loss.” well at least you got this part right.

        • 6ix 6 years ago

          Most of the bears are bulls at heart ,all are waiting for the right price. Realestate market is not efficient as stock market because of low liquidity. But slowly we are sinking. Least at the rate of $100 a day.

    • MM 6 years ago

      Interesting Ken. I was wondering after reading this, this morning because that is not what I am seeing on the ground here in the Fraser Valley at all. Although, I am not really watching the condo market. However for houses I get emails at least twice a week now with homes that have been price adjusted. Lots of listings. It seems to me like houses are priced all over the place for the same kind of property. Almost like everyone is trying to find the new price point. From all the people that I talk to about it. It has the feeling of a market that is adjusting to the B20 rules. Not a market that is in a panic. The idea out here in BC, that real estate always goes up in the long term is rather entrenched. That could change, but after 20 years of being right about it always going up, it is an rather entrenched idea. Confirmation bias I know. I’m so jealous that Toronto is actually correcting!

      • Bluetheimpala 6 years ago

        It is a shit-slurry of bad money out West. Prices haven’t increased unabated for 20 year, maybe if you average it out (duh!) but to suggest they’ve been printing increases for almost a quarter century is inaccurate and naive. Early chinese are selling to late chinese and and locals who are drinking the kool-aid (unfortunately a lot of boomers). Unless you just dig a hole and find gold/money anywhere in BC I can assure you it will completely crash as $$$ dries up and the black dong of 2019 gets all lubed up. This is not a slight to the Chinese but they, as a culture of investors, are horrible at gauging risk, have a tiered caste system that gets the low caste into trouble all the time (see the stock market), have an even crueler ‘outsider vs insider’ tier associated with the ruling party, and have seen a massive wealth increase among some vert poorly educated cohorts (the low caste). So, and again I don’t mean to slight but I am not an apologist, for the last 2-3 years smart money has been followed by dumb money; locals but also late foreign investment.

      • @xelan_gta 6 years ago

        Don’t worry MM, Vancouver market is way far from healthy too.
        Take a look at West Vancouver data, it’s so bad that you can call it a RE crash without any doubt. No place in GTA is in such a bad shape yet.
        34.9% ave. price decline YoY currently.
        Both GTA and GV markets will have a correction.

        • MM 6 years ago

          Oh wow that is some data for West Van.! Thanks for sharing.

          • MM 6 years ago

            Oh wow that is some data for West Van.! Thanks for sharing.

  • Mark Baum 6 years ago

    It seems like long term put options on Canadian companies heavily exposed to real estate are a really good hedge/insurance for your long portfolio positions. They could be profitable if real estate really does tank in the next 2 years or so, and also protect you against a market wide negative event.

    “I’m standing in front of a burning house, and I’m offering you fire insurance on it!”

    Thanks @xelan for your input ytd

    • Miao 6 years ago

      Go long dairy, short everything else. Canada is defending the cheese economy.

    • @xelan_gta 6 years ago

      You’re very welcome.

  • Bluetheimpala 6 years ago

    Bahahahah….been tracking the Fed announcement. Quarter point increase AND upgraded verbiage resulting in a forecast of 2, count ’em 2, more increases this year (maybe just one…but that is 100% at this point barring a war or a crash in the next 6 months). Whenever you think of BoC + Poloz just play the Queen song ‘Pressure’ in your mind, smile and keep on BDin’ on. BD4L.

  • Dee 6 years ago

    Inventory to sold graphs are worrying in GTA… Like hell…

  • southseacompany 6 years ago

    Teranet only tracks single-family home prices.

    It states this right on top of their webpage; “An independent representation of the rate of change of Canadian single-family home prices.”.

    So, it’s not really a complete and informative statistic.

  • SCE 6 years ago

    This website has become the http://www.zerohedge.com of Canadian real estate sites. For people who don’t know what that site is, it’s essential a propaganda machine spewing bearish sentiment… since basically forever (and this site has been around since at least 2009). Well guess what? Equity markets have been going way way way up since. I use to follow Zero Hedge religiously by taking shorts and losing big time. After I stopped reading the site, my portfolio has sky rocketed!

    The real estate bears on this site have been going on about how prices this year have been going up M/M because of pre-approved mortgages. I won’t discount that theory, but it’s likely those pre approvals have expired and/or used. I don’t know what terms people have been getting but I know HSBC (who is actively trying to win mortgage business) only gave out 3 months. I really doubt every home buyer got pre-approved anyways. Now that these pre-approvals are gone, how do you explain the stability so far? Yes, I know we need more time to see what happens, but so far steady as it goes is the base case.

    I really want to make my viewpoint clear. I’m not entirely sure where prices will be in 3 years time. It could be up, it could be down. I’m leaning toward stable around here. I just don’t think there will be a collapse like people here believe. The collapse may have already happened (from the top in May 2017) and we are now prices are basing. If that’s the case, we can all be correct, because I know most habitual posters have been bearish since last year. Is there more price depreciation ahead? Possible, but not a certainty. The people who are buying houses now, can afford a 2% hike in rates as per the stress test. Some may argue that lots of buyers are seeking alternative lenders. However, these lenders aren’t stupid, they aren’t going to lend their capital if they truly believe housing prices will crash. The borrowers may not be able to pay back and the lenders take possession of the houses – but let’s be honest, which lender wants to go to through all the legal work? It’s not their core business to do that. Even if it was, if they thought housing prices were going down, why would they want those houses?

    So, in the meantime, I’ll wait to see what happens – comfortable knowing people with the mindset similar to Blue and Gus are paying my mortgage.

    • Grizzly Gus 6 years ago

      LOL! So you are the type to read an article and to throw your money in blindly. 10 years from now you will be talking about how the globe, star, sun, fp etc are all wrong as well…………. guess that fomo shit got to you too eh pal? Can’t blame a dog for being a dog I guess. Chase that car baby. And I’ll repeat do you have any properties in Beaches or leslieville area? Got my chips of the table last April, happy to have a Landlord subsidize my living until I jump back in. 20k a year in rent vs the 100-200k i would have lost in equity………… and I truly believe this shot show is just getting started

      This site actually gives zero financial recommendations. It simply presents presents facts and analysis behind the numbers you don’t get from the mainstream. Do not believe they accept paid content.

      • SCE 6 years ago

        You pay $1670 in rent a month with a kid? Is this some sort of shack?
        Traded that in for your Leslieville/Beaches house? Nice upgrade!

        • Grizzly Gus 6 years ago

          $1750. 1 bd plus den. 575 sq feet, nice balcony with a bbq. 2015 condo in Leslieville. Think I did pretty well actually. Had some competition on the place but won by offering to pay for the year up front. Almost month to month now. No kids no debts no problems.

          Miss my old beaches detached. But place needed some work and I couldn’t believe the gains I had on it………………… gains that are now in my pocket

          • SCE 6 years ago

            So you sold in 2015 and have been renting since. Yep, sounds like you did well. How much did prices go up since 2015? Have you been waiting for the market crash to get back in?

            All makes sense now. This bearish banter isn’t really a view, it’s wishful thinking. Hope isn’t a strategy. That’s the lesson I’ve learned through years working in capital markets.

          • Mark Baum 6 years ago

            @SCE You need some help with reading comprehension.

            He has been staying there almost 1 year, which was paid up front. After the 1 year mark his lease goes month-to-month. The condo is a 2015 build.

            Also, it’s concerning that you have worked years in capital markets but seemingly don’t understand what happens to residential real estate values, especially after a large run up during the tightening phase of a credit cycle.

          • Grizzly Gus 6 years ago

            Hindsight I was very lucky. Wanted to have a full a week, with uninterrupted weekend before my offer date. Easter weekend last year was the 16th. So I listed on the 6th, pen to paper on the 12th. 19th is when home cap almost blew up. 20th was when fairhousing was reveled. I almost decided to wait to do it after Easter weekend………… which would have had me listing on the 20th. Dodged that bullet

          • Joe 6 years ago

            How much gains Gus? When did you buy it? I think real estate in Toronto proper or more specifically the Beaches didn’t drop much YoY?

    • carlton 6 years ago

      ” After I stopped reading the site, my portfolio has sky rocketed!” – why are you back? why even take the the time to comment? you could be working on your portfolio instead of arguing with bears, hmmmm ….. getting nervous?

      “The real estate bears on this site have been going on about how prices this year have been going up M/M because of pre-approved mortgages.”

      Huh ! – I’ve stated time and time again – My home is down a 100k since last april! (it was extremely inflated low rates and idiots)

      As rates Rise inventory has increased, sales have Fallen off a cliff, banks are Appraising homes 20% less in value, and there are more Hikes to come!
      Is loosing 100k a year stability if it is, lets keep it happening (need cheap investment property), I bought 2007 and thought i over payed as the home was 100k less the year prior.

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