Toronto vs. Vancouver: Who’s weathering the condo market storm better?

In Canada's real estate landscape, Toronto and Vancouver are experiencing notable shifts in their condominium markets, with current conditions favoring buyers in both cities. A recent CIBC report highlights that Ontario and British Columbia are particularly vulnerable to a slowdown in condo investments, traditionally dominated by investors. The sales-to-new listings ratio in both Toronto and Vancouver indicates a market surplus, providing buyers with increased options and bargaining power.

In Vancouver, condo prices have remained relatively stable despite a slowdown in sales. Brendon Ogmundson, Chief Economist at the BC Real Estate Association, notes that while sales in Metro Vancouver have hovered around 1,000 units per month, active listings have reached approximately 5,000 to 6,000. This balance has maintained price stability, even as the market becomes more favorable to buyers.

Conversely, Toronto is witnessing a significant increase in condo listings, reaching a 10-year high. This surge is largely attributed to homeowners facing higher mortgage payments due to recent interest rate hikes. The influx of available units has led to longer selling times and heightened competition among sellers, potentially driving prices downward.

The abundance of condo listings in both cities is linked to investors reassessing their positions in the market. Factors such as rising mortgage costs, uncertain capital appreciation, and slower rent growth have prompted many investors to reconsider purchasing new units. This hesitation has contributed to a notable drop in pre-construction condo sales, with a decrease of more than 50% in the first half of 2024 compared to the same period in 2023.

The slowdown in pre-construction sales is expected to impact future condo supply in both Toronto and Vancouver. As developers face challenges in securing necessary funding due to sluggish pre-sales, the initiation of new projects may be delayed. This potential reduction in future supply could influence market dynamics in the coming years, potentially affecting affordability and availability for prospective buyers.

In summary, while both Toronto and Vancouver are experiencing buyer-friendly conditions in their condo markets, the underlying factors differ. Vancouver's market is characterized by stable prices amid steady listings and sales, whereas Toronto is dealing with a significant increase in listings and potential downward pressure on prices. Prospective buyers and investors should closely monitor these evolving trends to make informed decisions in these dynamic markets.