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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