It’s no secret that many of the people who are buying the most expensive real estate in Canada have extremely deep pockets, and that is equally true of both foreign and domestic buyers. Luxury real estate is always evaluated as a different entity when looking at housing prices and the extent to which they are affordable – or not – for prospective homebuyers. Many of the homebuyers who might be able to afford a more standard family home that is selling for way over asking price wouldn’t even be able to consider purchasing luxury properties.
Luxury real estate is also not as common in certain areas of the country, although it is not exclusive to areas of the country where the housing market is at its hottest either. Plus, unlike homes purchased as investments that may not be earmarked for living in the home, most luxury real estate is purchased with the intention of living there. That’s not to say it is not possibly being bought as an investment, but it is not nearly as common.
What we’re going to look at with our entry this week is a review of the Re/Max 2022 Luxury Market Report and highlighting all of the main points that would be of interest to realtors and / or clients they are working with who would like to be best informed before buying very expensive real estate. Realtors will want to take note too, as these clients will be ones that they will want to work with for obvious reasons. Here at Real Estate Leads our online real estate lead generation system is an excellent choice for any realtor who wants to get that leg up on the competition in a big way when it comes to generating new clientele.
Looking at the report, this is what we feel is most noteworthy and what you might want to see for yourself or perhaps include in any report communication that you might be forwarding to certain types of buyers.
More Activity in Smaller Centres
The extensive and active buying of luxury homes is spilling into smaller centres where the buyer often has more purchasing power. The COVID pandemic has accelerated that trend, and this is something that has already been discussed at length. This is very true for Ontario. Iand a noteworthy buyers’ trend for markets like London, Kitchener-Waterloo, Hamilton, Barrie, Kingston and Ottawa.
Home sales are pushing into higher price points across Canada. The luxury segment over $3 million represents is now making up about 4% of total sales in Metro Vancouver and 1.8% of them for the GTA. The East Coast factors in too with sales over $1 million in Halifax-Dartmouth representing 2.2% of total sales for the region.
Previous records for luxury sales were broken for the Greater Toronto Area in 2021, while Metro Vancouver fell short of 2016 record levels by just over 200 sales.
Condominium sales over the $3 million price point in the GTA and Metro Vancouver have bounced back firmly from 2020, setting a new record in the GTA and matching 2016 numbers for Metro Vancouver. There were 106 luxury condominium units sold in 2021 in Toronto, and that is up 82.8% over 2020 levels, while 144 luxury units had new owners in Metro Vancouver for 2021, and that is a 44% increase from the previous year.
As expected there was an upswing in non-resident buyers in Metro Vancouver area, but seeing the same for Halifax-Dartmouth in 2021 was not as expected.
Role of Young Entrepreneurs
An increase in young entrepreneurs making these types of big money purchases has been seen in the GTA, and a good number of them have realized crypto-currency gains to make their way into the housing market. Family wealth also continues to contribute to the increase in luxury home sales as it always has, with many parents utilizing their own equity assets to help children get into the luxury real estate market.
There are also greater numbers of non-resident buyers returning to Canada’s residential housing markets, even though taxes aimed at foreign ownership in Metro Vancouver – 20% Foreign Buyer Tax, 2% Speculation and Vacancy Tax (SVT), and 3% Empty Home Tax and the 15% Non-Resident Speculation Tax aimed at Ontario’s Greater Golden Horseshoe Area.
Sales of building lots have declined at the top end, and this is likely due to buyers being reluctant to embark on construction without cost clarity and difficulties in finding labour, plus the realities of supply chain disruptions due to the pandemic and other factors that are now adding a lot of time to the custom-building processes that are common with luxury home builds.
The $3 million price point is where luxury home inventory is balanced in Metro Vancouver and there are only 200 such homes homes meeting the same criteria that are currently listed for sale in Toronto. Lastly, supply levels are exceptionally low in about half of markets surveyed for the Re/Max report. Locations including the GTA, Victoria, Kelowna, London, Kitchener-Waterloo, Hamilton, Barrie, Kingston and Ottawa.
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