Toronto beats Vancouver as most expensive real estate market in Canada, report suggest

A for sale sign outside a home indicates that it has sold for over the asking price, in Ottawa, on Monday, March 1, 2021. (THE CANADIAN PRESS / Justin Tang)

Toronto is now the most expensive market for real estate, according to a new report, beating out Vancouver for the top stop for the first time in decades.

The Royal Bank of Canada (RBC) published an analysis on Friday, which examined early data from local real estate boards, that showed Toronto’s composite MLS home price index benchmark of $1.260 million was edging out Vancouver’s benchmark price of $1.255 in January.

“It’s a stunning development though not entirely surprising considering how hot the Toronto-area market has become, especially since the fall,” RBC Senior Economist Robert Hogue wrote in his report on Friday.

“Toronto’s benchmark price soared over the past five months, including a mind-blowing 4.3 per cent monthly increase—or nearly $52,000—in January alone. Vancouver prices have accelerated as well, just not to the same extent.”

Hogue said that Toronto’s real estate market did not slow down even amid the spike in COVID-19 cases this winter, pandemic restrictions and the major January snowstorm.

He adds that the price surge comes down partly to competition between buyers, which is “as fierce as ever.”

“Intense bidding wars have pushed prices to new heights both in level ($1.260 million for the composite MLS HPI benchmark) and rate of increase (33.3 per cent). In fact, the Toronto area has now become the priciest market in Canada,” he said.

“Buyers are especially fond of single-family homes (prices are up an astounding 36 per cent y/y, with gains exceeding 40 per cent in Durham and Peel regions) but also increasingly interested in condos (prices up 26 per cent y/y).”

Hogue expects the market will cool off later this year due to higher interest rates.

In Vancouver, buyers are met with challenges due to the “rock-bottom inventories,” Hogue said, adding that active listing barely increased from a decades-low last month preventing buying opportunities.

“We expect tight demand-supply conditions will maintain considerable upward price pressure on all housing types in the near term,” he said.