Vancouver housing market on firmer footing than Toronto’s

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Canada’s most expensive housing markets took a beating when interest rates soared, and now they face a new challenge.

United States President Donald Trump‘s tariffs threaten to unleash more turbulence for real estate, but according to a new report by TD Economics, Vancouver is on firmer ground than Toronto to weather the blows.

High housing prices in both cities made them vulnerable when the Bank of Canada raised interest rates, but while Toronto’s woes are well known, Vancouver “has flown a bit under the radar,” said Rishi Sondhi, an economist for Toronto Dominion Bank.

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The Greater Vancouver Area, while weaker than most Canadian markets, has held up better than the Toronto region, he said. Over the past three months, home sales here are up 21 per cent from the year before while in Toronto they are up 8 per cent.

While average and benchmark Vancouver prices are down 6 per cent and 4 per cent, respectively, from pandemic peaks; in Toronto they have fallen 15 per cent.

Condos are Toronto’s weak spot. The supply glut and weak demand that have put pressure on sales and prices have been exacerbated by declining population growth and the brewing tariff war, said Sondhi.

Condo sales in Toronto were down 12 per cent in January from a year ago while in Vancouver, they climbed 14 per cent. The ratio of condo sales to active listings in the GTA is about 60 per cent below its long-term average. In Vancouver it’s about half that, he said.

One reason for Vancouver’s resilience is that affordability did not deteriorate as much during the pandemic as in Toronto, where home prices skyrocketed when interest rates hit bottom.

Just before COVID-19 in 2018 and 2019, the B.C. government introduced measures to cool housing, including hikes to the foreign buying tax rate and land transfer and property taxes. As a result, prices were already declining at the end of 2019, said Sondhi.

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“Although both markets could struggle this year, starting points matter in housing, and the GVA is on firmer footer than the GTA in terms of sales levels and price trends,” said Sondhi.

Trump’s trade war is already being felt in Canada’s real estate market.

“The trade war launched in March by the U.S. against Canada (Mexico and China) threatens to further erode market confidence, upend buyers’ plans and quiet a usually busy spring season,” said Royal Bank of Canada economist Robert Hogue. “The impact would intensify the longer trade uncertainty rages.”

Home sales declined across the country in February, but Toronto stood out by plunging to a new cycle low, he said.

Sales dropped 29 per cent from the month before, the biggest one-month fall since the early days of the pandemic.

“The turn of events raises serious questions about the market’s ability to continue on its bumpy recovery path in the near term,” said Hogue.

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Layoff announcements in the United States jumped the most since early in the pandemic in February, led by cuts in the government sector, as Donald Trump’s new Department of Government Efficiency slashes jobs.

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There were 172,017 job cut announcements last month, up 103 per cent from last year and the most since July 2020, according to data from Challenger, Gray & Christmas.

The largest number of cuts were in the federal government, at more than 62,000.

• Today’s Data: U.S. NFIB Small Business Optimism

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Gordon from Red Deer, Alberta, inherited his father’s coin collection 15 years ago, but with the high prices of gold these days he recently sold several of the $100 coins, with some of them fetching as much as $20,000. His problem now is the capital gains tax. FP Answers has some ideas on how Gordon can get a handle on this. Read on

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Calling Canadian families with younger kids or teens: Whether it’s budgeting, spending, investing, paying off debt, or just paying the bills, does your family have any financial resolutions for the coming year? Let us know at wealth@postmedia.com.

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McLister on mortgages

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Want to learn more about mortgages? Mortgage strategist Robert McLister’s Financial Post column can help navigate the complex sector, from the latest trends to financing opportunities you won’t want to miss. Plus check his mortgage rate page for Canada’s lowest national mortgage rates, updated daily.

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Visit the Financial Post’s YouTube channel for interviews with Canada’s leading experts in business, economics, housing, the energy sector and more.

Today’s Posthaste was written by Pamela Heaven, with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.

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