Canada

Toronto and Vancouver Real Estate Rank Low For Density, High For Prices

Toronto and Vancouver Real Estate Prices Rank Low For Density, High For Prices

Canadian real estate prices have been climbing, in cities with perceived housing shortages. The belief that there isn’t enough land to accomodate more people, shot prices higher in Toronto and Vancouver. This week, the Fraser Institute poured some cold water on that narrative, showing that Canadian cities have a long way to go in terms of densification. Now that we know where Canadian cities stand in terms of density, we wanted to see how they rank in terms of pricing. Specifically, we wanted to see how condo prices rank. Many Canadian cities demonstrated a level of pricing, similar to their density – just not Toronto and Vancouver.

Density In Relation To Prices

It’s a common belief that density is related to price, so we wanted to see how this holds up right now. To do this, we took the Fraser Institute’s report on density. Then, we added ranks for economic output per person, and the average square price per square foot for an apartment in these cities. Here’s the results.

City Rank Density Vs. GDP Per Capita Vs. Condo Prices

Click city to highlight. Source: Fraser Institute, Brooking Institute, Better Dwelling.

Toronto Real Estate Prices Are The Most Detached

Canadian cities that the government has warned are bubbly, have a large detachment from density to prices. Toronto, which ranks 19th for density, ranks 11th for condo prices – the worst on the list. Vancouver is a little better at 13th for density, and 9th for prices. Montreal is 16th for density, and 17th for prices – which seems just about right for them at this point. It’ll be interesting to see if Montreal bubbles up the ranks for the next few years, before correcting. Canadians tend to roll that way.

Average Condo Price Per Square Foot

In US dollars. Source: Fraser Institute, Brooking Institute, Better Dwelling.

Density To Price Detachment May Be Bad News

Cities that rank high for prices, but relatively low for density may be prone to corrections. Toronto is currently in downturn, that we all know. However, so are London, New York City, and Singapore. Despite these three cities being global hubs of economic activity, they did overshoot pricing. It happens, even if you’re some of the most dense financial hubs in the world.

It would appear Toronto and Vancouver overshot prices, but they aren’t alone. This is a trend that hit a number of global real estate markets. Pricing a home is far from a perfect science, and some people will pay above market price, while some will find a deal. That’s good news for people that “missed” the price climb, since prices usually moderate. Not great news for those that overpaid. Just consider that a pricing premium for getting your home “first” in a rush. Kind of like an iPhone line stander premium. 😀

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11 Comments

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  • Reply
    Dan 6 months ago

    Just checking if currency conversion was done properly here. In the table “Average Condo Price Per Square Foot” Toronto is listed as $629/sq foot. At the bottom of this table it says “US Dollars”. According to “condos.ca”, the average price in Toronto now around $620 CANADIAN dollars (which is around $500USD/per sq foot). Can you please confirm that data is correct?

    • Reply
      Aimee 6 months ago

      Data looks correct, but they used city center prices (i.e. not averaging down for Scarborough and Etobicoke).

      Also similar pricing to pre-sale condos, which would include a lot more higher priced new constructions since they’re mostly downtown Toronto. Remember that the MLS is missing at least 30% of transactions, and most of them are condos.

      • Reply
        Dan 6 months ago

        Ok, but how about other cities? Is it a centre city price or entire city price? For example I know for sure that Manhattan price as well above $1237 listed in this article (it’s around $1800).

  • Reply
    Im Therious 6 months ago

    Interesting math is to calculate the price of a 1,000 sqft place and divide by GDP/capita to calculate the number of years to purchase this kind of place.

    By my reckoning, Vancouver is up there with the top tier financial centres of the world (>20 years).

    Only except it isn’t.

    • Reply
      Trader Jim 6 months ago

      Where the GDP comes from is a factor to consider. In Toronto and Vancouver, it’s largely around building housing. Even the banking and finance, is 50% related to the housing industry.

      Definitely interesting to see that cities that are known for products are typically dense, with large amounts of GDP per capita. Conversely, Vancouver isn’t really known for anything other than beautiful condos. Especially since the mining industry mostly came to Toronto.

  • Reply
    Trevor 6 months ago

    Mostly seems like a nothingburger. Toronto isn’t dense. That’s clear. Walk 6 blocks east of Yonge and that is staggeringly obvious. But TO prices aren’t so detached from Boston or New York. Yeah, it’s a little overpriced, but that could be the result of demand created by low density. Low density might be inefficient and a drag on per-capita GDP. Too many unknowns for me.

    *Note to self – but a condo in Athens!

  • Reply
    bluetheimpala 6 months ago

    Not so detached? Are you crazy? Bean town is 932 a square foot , Toronto is 629…Bostong square foot price is approx 50% greater than ours yet has the highest GDP per capita….ipso facto, Boston as a whole can afford the housing prices and the pricing is based on fundamentals. Toronto prices but more so Van aren’t ‘a little overpriced’; when parents have to take money out of their house to fund their children that’s crazy. People taking out second mortgages to buy houses to flip, that’s crazy. People buying houses. doing nothing and then flipping within months for 20% profit, that’s crazy.

    BD4L

  • Reply
    Sam 6 months ago

    Really disappointed in BD. What kind of “stats guy” (Author’s self description) would compare “ranks” on a linear chart?!! I’m not arguing about the article or its conclusion in general but the first chart is super misleading!

  • Reply
    Jungle 6 months ago

    Great way to look at this, thanks for the article!

  • Reply
    Tommy 6 months ago

    This has to do with zoning laws. There is a ton of land in Toronto but most of it is occupied by low rise residences. All over the city. Condos or even mid-rise buildings are not allowed to be built on this land – just about any street in the entire city save for the Yonge St. corridor. This translates into low density but also less housing and more demand for the housing that exists.

  • Reply
    Oleksandr Voznyy 6 months ago

    I agree to compare GDP or mean family income vs price. Density seems meaningless.
    Then, Toronto is actually better than Hong Kong or Singapore or SF, i.e. we have a way to grow and I don’t see the reasons prices should fall.
    What about Beijing prices, btw?

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