With people currently buying Vancouver homes at the slowest rate in years, the city is poised to lose its status as the second largest housing market in Canada, new data suggests.
Measured by the total dollar value of real estate transactions, Vancouver’s market shrank substantially in January 2019, when about $1.1 billion in residential sales on a non-seasonally adjusted basis — e.g., 41.7% less than January 2018, according to data released by the Canadian Real Estate Association (CREA) on Friday.
This figure just about matches the dollar volume of real estate transactions in Montreal, where home sales increased by 16.4% year-over-year, totalling about $1.09 billion in January. As always, Toronto remains the largest market in the country by dollar volume, with sales reaching $3 billion in value last month.
This is the closest Vancouver and Montreal have ever been to closing the gap since 2008. Although Vancouver’s market is significantly more expensive, Montreal was able to catch up by selling more homes.
Based on population size, Montreal is the second largest city in Canada, but the city’s housing market has long been outflanked by Vancouver, which frequently ranks among the least affordable cities in the world. In January, the average price of a home in Vancouver was $1,003,104; in Montreal, the average was substantially lower, at $394,896.
Vancouver has been subjected to a host of regulations in the past few years introduced at the federal, provincial and municipal levels to rein in runaway prices, including a speculation tax, a vacancy tax and a controversial foreign buyers tax. The market was also hit hard by the mortgage stress test introduced by the Office of the Superintendent of Financial Institutions at the start of 2018, which made it harder for homebuyers to qualify for a mortgage.
These policies have visibly impacted home sales in Vancouver, which fell substantially in 2018. In January, sales continued to decline in Metro Vancouver, falling by 39.3% compared to the same month in 2018, according to data from the Vancouver Real Estate Board.
Meanwhile, Montreal’s low home prices and lack of housing policies have boosted sales, which grew by 7.1% since December — the fastest pace it’s moved in a decade. Sales in Vancouver and Toronto grew only by 1.2% over the same period.