Canada-U.S. Home Price Comparisons: What Drives Disparity?

Canada-U.S. Home Price Comparisons: Lack of Choice Drives Disparity

Depending on the comparison being made, Canada can come out looking pretty sweet next to the United States. But some comparisons, like those related to housing prices, aren’t so clear-cut.

Canada and the United States will be compared in “Who has it better?” debates until the end of time. Surface similarities make it easy to initiate these comparisons, but nuance can prevent the drawing of any clear conclusions. The best you can hope for is to learn something useful.

That’s what happened when NerdWallet compared housing prices in three major Canadian real estate markets (Toronto, Vancouver and Calgary) to cities in the U.S. (Chicago, Denver and Dallas) with similar populations, economic drivers and cultural/geographic amenities.

The theory was that the similarities would provide more evidence that Canadian housing is vastly and senselessly overpriced. But what we came away with is a better understanding of just how unique Canada’s biggest housing markets are, and how that singularity complicates home buying.

Toronto vs. Chicago: Battle of the skylines

As real estate markets go, Toronto and Chicago appear to be quite similar. Great cities on the Great Lakes, both are major financial trading hubs and iconic comedy breeding grounds. Each is home to about 2.8 million people [1] and faltering NBA franchises.

Considering the similarities, the discrepancy in the cities’ median home prices might seem shocking. In April 2024, the median sale price in Chicago [2] was just under $486,000 CAD [3]. In Toronto, the median price was $905,000. [4]

The difference isn’t a matter of housing supply. It’s city supply — the lack of other urban centers in Canada that offer the same combination of economic opportunities and lifestyle options that Toronto does.

“Despite Canada’s geography being quite large overall, the population tends to congregate in a few communities, says Karen Yolevski, chief operating officer at Royal LePage.

In the U.S., home buyers can find similar economic and cultural opportunities in multiple metropolises: Chicago, New York, Boston, Charlotte and Atlanta just to name a few. In Canada, there’s really only Toronto. And you’re going to pay for that exclusivity.

“Toronto is unique in the sense that it is the largest city. It’s our New York, right? So if you start comparing it to Manhattan prices, you’re going to start seeing some comparables that align a bit more favourably,” Yolevski says.

Vancouver vs. Denver: Tech, summits

The similarities between Vancouver and Denver are also easy to spot. Around 700,000 people live in each city. Their economic growth is driven by booming tech sectors. They’re near mountains and widely considered to be among their respective countries’ prettiest, coolest cities. Yet Vancouver’s median home price in April, $1.17 million, was about $350,000 CAD higher than Denver’s.

Andrew Lis, director of economics and data analytics at the Real Estate Board of Greater Vancouver, says an accurate comparison between Canadian and U.S. housing markets has to account for under-the-hood differences — building codes, the length of mortgage terms, and home style preferences, for example — as much as it does similarities.

“So it makes it really hard to do that comparison and give you some kind of neat and tidy answer as to why it is that Denver is cheaper,” Lis says.

Like Toronto, Vancouver really is a one-of-a-kind opportunity for Canadian home buyers. It’s a large economic and cultural center that also happens to be sandwiched between a gorgeous ridge of mountains and an orca-populated stretch of the Pacific Ocean.

If it weren’t for the population differences, Vancouver might be better compared to coastal cities like Seattle, San Francisco, Los Angeles and San Diego — all of which had median home prices higher than Vancouver’s in April.

Calgary vs. Dallas: Petro paradises

This final comparison might be the closest of the bunch. Both Calgary and Dallas have populations of about 1.3 million people. Their oil-driven economies are rapidly evolving. Despite their conservative reputations, they’re both demographically diverse. They’re also both ideal places to be if you’ve misplaced a cowboy hat.

Like Vancouver and Toronto, Calgary is unique among Canadian cities. It’s the heart of the Prairie economy and spitting distance from the Rocky Mountains. But its median home price in April ($565,500 CAD) was only slightly higher than Dallas’ ($533,188 CAD).

One reason Calgary’s prices don’t dwarf Dallas’ can be traced back to 2014, when oil prices tanked and stopped the Calgary economy in its tracks. Housing prices flatlined for about seven years, until pandemic-era interest rates and strong population growth resuscitated them.

“We’ve gone through a lot more ups and downs, I think, than some markets,” says Ann-Marie Lurie, chief economist at the Calgary Real Estate Board. “Some markets are stable with continual growth, whereas from 2015 to 2019, we had oversupply here and our prices were generally falling.”

Home prices in Dallas, where the economy began diversifying sooner than Calgary’s, didn’t experience the same extended malaise during that period. Had Calgary’s market maintained the momentum it had prior to 2014, it’s fair to assume the city’s prices would currently be higher than Dallas’.

The takeaway

What Canada’s real estate market truly lacks compared to America’s isn’t affordability, it’s choice. We simply don’t have the same number of large cities for home buyers — or businesses, or newly arrived immigrants — to plant a flag in. As a result, we wind up competing over opportunities to live, work and own property in a small number of communities.

According to the U.S. Census Bureau, there are 123 cities in the U.S. with populations over 200,000. In Canada, there are 21. The more unique one of those cities is, the more competitive its real estate market is going to be.

So, how does knowing all this help you as a home buyer? Understanding the level of demand in your local market can drive positive action, such as:

Saving a larger down payment: A more substantial down payment will give you more buying power and financing flexibility.
Getting pre-approved for a mortgage: With a mortgage pre-approval in hand, you’ll be able to make a legitimate offer as soon as you find the right home.
Finding a buyer’s agent: The real estate agent you want is someone with a track record of success in competitive bidding scenarios.
Keeping your cool: Stay calm during an emotional bidding war.

When you’re up against the high prices and supply/demand imbalances found in Canada’s major housing markets, 100 people might have eyes on the home you want. That’s daunting, but less so if you get a jump on the competition.

Population figures courtesy Statistics Canada (2021 census) and the U.S. Census Bureau (2020 census).
U.S. median sold prices courtesy Realtor.com.
USD to CAD conversions were accurate at the time of writing, but may fluctuate.
Canadian median sold prices courtesy of the Toronto Regional Real Estate Board, Real Estate Board of Greater Vancouver and Calgary Real Estate Board. Figures do not include greater metropolitan areas.