Real Estate News 24

Real Estate News 24

Canadian Luxury Real Estate Sales Double, Triple in Some Markets

Beth McCandry

The pandemic accelerated the value of luxury homes in major Canadian centers to new heights in 2021

Demand for Canada’s luxury homes shifted at full speed from coast to coast in 2021 as both domestic and nonresident consumption of tangible assets like homes hit new levels, according to a report released today by RE/MAX Canada.

“The currency of home ownership has clearly taken on a new dimension in 2021,” said Christopher Alexander, President of RE/MAX Canada. “Canadians are moving to secure their future. The pandemic has fueled a real estate rush that has engulfed every segment of the market, and as a result, the value of housing has increased exponentially – not just as a form of shelter, but also as a desirable asset class that offers an attractive rate of return.”

the RE/MAX Luxury Market Report 2022 examined Canadian luxury real estate trends and developments in condominium and condominium sales in excess of $3 million in Metro Vancouver and the Greater Toronto Area (GTA) and tracked sales in excess of $1 million in 17 additional markets including Victoria, Kelowna, Edmonton, Calgary , Regina, Winnipeg, London, Kitchener-Waterloo, Hamilton, Barrie, Kingston, Ottawa, Halifax-Dartmouth, Moncton, Saint John, Charlottetown and St. John’s.

RE/MAX Canada has determined this based on an analysis of sales provided by RE/MAX brokers and agents based on data from local real estate authorities Eighteen of the 19 markets saw double- and triple-digit percentage increases. The greatest appreciation has been in smaller urban markets such as Barrie, London, Kitchener-Waterloo and Hamilton, where sales of homes priced above $1 million have soared 517.8 percent, 255.1 percent, 208 percent and 199.5 percent and Canada’s largest luxury product markets, the Greater Toronto Area and Metro Vancouver, respectively increases of 112.8 percent and 75.8 percent for homes priced over $3 million, while transactions involving homes priced over $10 million increased significantly 156 percent and 167 percent or The only outlier was Charlottetown, where sales fell to four units from over $1 million, compared to seven units sold last year.

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“As high as these numbers are, we think they only scratch the surface,” says Alexander. “In our view, these levels probably don’t really reflect what’s happening in markets across the country, given a plethora of exclusive sales and, in red-hot markets like Toronto, instances of private sales where buyers are approaching sellers whose listings have expired.” ”

Last year marked the continuation of a pandemic-related spending spree that began in 2020 and shattered existing records for Canadian luxury home sales and, in some cases, coast-to-coast price points.

“Despite a third and fourth wave of Covid-19 in 2021, real estate markets continued to rumble and hum,” said Elton Ash, executive vice president, RE/MAX Canada. “Inventory shortages were prevalent in at least half of the markets we surveyed, and helped push values ​​up across much of the country.”

RE/MAX brokers interviewed for the report attributed the increase in luxury activity to multiple economic drivers as vaccine rollouts continued nationwide. Stock markets rallied, with the TSX, S&P and Nasdaq reporting some of their best years on record. Interest rates remained at historically low levels. GDP growth for 2021 is estimated at 4.5 percent as businesses returned to pandemic norms – including hybrid schedules – restaurants, bars, gyms, sports venues and theaters finally opened their doors.

Trade-up activity was brisk in most markets as buyers benefited from significant capital gains on the sale of their existing properties.

“It seems more than ever that buying a home is a retirement strategy that many people believe will help the next generation buy a home,” says Ash.

Real estate has traditionally been a significant asset class in the investment portfolios of high net worth individuals, typically consisting of residential, commercial, industrial and multi-unit lots. However, the residential performance has been undeniable over the past decade and that has garnered worldwide attention. Financial communities have also taken advantage of this trend, with real estate investment trusts (REITs) now investing in single-family homes in the US and, to a lesser extent, Canada.

Canadian Luxury Real Estate Highlights

  • Luxury home buying is spreading in smaller centers where the dollar continues to rise. While the pandemic accelerated the trend, the bigger bang for the buck should continue to draw buyers from larger centers, particularly in Ontario. Inventories are reaching critical levels in markets such as London, Kitchener-Waterloo, Hamilton, Barrie, Kingston and Ottawa.
  • Home sales are pushing into higher price brackets nationwide. The luxury segment above $3 million represents approximately four percent of total sales in Metro Vancouver and 1.8 percent of sales in the GTA. Revenue in excess of $1 million in Halifax-Dartmouth equivalent 2.2 percent of total sales.
  • Records for luxury sales in excess of $3 million were broken in the greater Toronto area in 2021, while Metro Vancouver missed 2016’s record level by just over 200 sales.
  • Condo sales above the $3 million price point in GTA and Metro Vancouver have rebounded set a new record in GTA starting in 2020 and match the existing record set in 2016 in Metro Vancouver. The GTA saw 106 condos sold in 2021, up from 82.8 percent from 2020, while 144 units changed hands in Metro Vancouver 44 percent compared to the previous year.
  • RE/MAX agents have reported an uptick in non-resident buyers in Metro Vancouver and Halifax-Dartmouth In 2021, however, domestic buyers continue to drive luxury sales in the greater Toronto area.
  • An increase in young entrepreneurs was noted in the GTA, with some using cryptocurrency gains to carve their way into the housing market. Family wealth has also contributed to the rise in luxury home sales as many parents let go of the reins so children can enjoy the fruits of their labor.
  • Non-resident buyers are returning to Canada’s housing markets, despite the existence of three taxes targeting foreign property in Metro Vancouver – the 20 percent foreign buyers tax, the 2 percent speculation and vacancy tax (SVT) and the 3 percent vacancy tax, and the 15 percent non-resident speculation tax on sales in Ontario’s Greater Golden Horseshoe Area.
  • Sales of building lots have declined at the top end as buyers are reluctant to start construction When costs are unclear, labor is hard to find, and supply chain disruptions can add years to the development process.
  • Inventory is balanced above the $3 million price point in Metro Vancouver, while Toronto has just 200 such homes currently for sale. Supply levels are exceptionally low in 50 percent of the markets studied for this report, including GTA, Victoria, Kelowna, London, Kitchener-Waterloo, Hamilton, Barrie, Kingston and Ottawa.

About the Luxury Market Report 2022

The 2022 RE/MAX Canada Luxury Market Report analyzed 19 Canadian luxury real estate markets using data and insights provided by RE/MAX agents. RE/MAX brokers and agents were surveyed on market activity and local developments based on local real estate agency data and market activity in 2020 and 2021.