Demand for Canadian luxury properties shifted into high gear from coast-to-coast in 2021 as both domestic and non-resident consumption of tangible assets such as residential real estate reached new levels, according to a report released this week by RE/MAX Canada.
“The currency of home ownership has clearly taken on a new dimension in 2021,” said Christopher Alexander, president, RE/MAX Canada, in a press release. “Canadians are moving to secure their future. The pandemic fuelled a run on real estate that has encompassed every segment of the market, and the value of housing has increased exponentially as a result–not only as a form of shelter but a desirable asset class that provides an attractive return on investment.”
The RE/MAX Canada 2022 Luxury Market Report examined trends and developments in sales of freehold and condominium properties priced over $3 million in Metro Vancouver and the Greater Toronto Area (GTA) and tracked sales over $1 million in 17 additional Canadian housing 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.
According to an analysis of sales provided by RE/MAX brokers and agents based on local real estate board data, RE/MAX Canada found that 18 of the 19 markets analyzed recorded percentage increases in the double and triple digits. The greatest appreciation occurred in smaller urban markets such as Barrie, London, Kitchener-Waterloo and Hamilton, where sales of homes priced over $1 million have climbed 517.8%, 255.1%, 208% and 199.5% respectively. Canada’s largest markets for luxury product—the Greater Toronto Area and Metro Vancouver—experienced increases of 112.8% and 75.8%, respectively for homes over the $3-million price point, while transactions of homes priced over $10 million rose a substantial 156% and 167% respectively. The only outlier was Charlottetown, where sales over $1 million declined to four units, down from seven-unit sales one year earlier.
“As high as these numbers are, we believe they just scratch the surface,” said Alexander. “In our view, these levels likely do not truly reflect what is happening in markets across the country, given an abundance of exclusive sales and in white-hot markets such as Toronto, instances of private sales where buyers approach sellers whose listings have expired.”
Last year marked the continuation of a pandemic-fuelled buying spree that started in 2020, shattering existing records for luxury home sales and in some instances, price points from coast to coast.
“Despite a third and fourth wave of Covid-19 in 2021, real estate markets continued to rattle and hum,” ssid Elton Ash, EVP, RE/MAX Canada. “Tight inventory levels were prevalent in at least half of the markets we surveyed and contributed to an uptick in values across much of the country.”
RE/MAX brokers who were surveyed for the report attributed the increase in luxury activity to abundant economic drivers, as the national roll-out of the vaccines continued. Stock markets rallied, with the TSX, the S&P and the Nasdaq reporting some of their best years on record. Interest rates remained at historically low levels. GDP growth for the year is estimated at 4.5% in 2021 as businesses returned to pandemic norms–including hybrid schedules—restaurants, bars, gyms, sports venues and theatres finally opened their doors.
Trade-up activity was brisk in most markets, as buyers cashed in on substantial equity gains realized when selling their existing properties.
“More so than ever before, it appears that buying a home is a retirement strategy which many people believe will help that next generation achieve home ownership,” says Ash.
Real estate has traditionally been an essential asset class in the investment portfolios of ultra-high net worth individuals, usually comprised of multi-unit residential, commercial, industrial, and land. Residential performance, however, has been undeniable over the past decade, and that has generated global attention. Financial communities have also tapped into the trend, with Real Estate Investment Trusts (REITs) now investing in single-family residential housing in the US and to a lesser extent, Canada.
Report highlights:
- Luxury home-buying activity is spilling into smaller centers where the dollar goes further. While the pandemic accelerated the trend, bigger bang for the buck is likely to continue to draw purchasers from larger centers, particularly in Ontario. Inventory is reaching critical levels in markets like London, Kitchener-Waterloo, Hamilton, Barrie, Kingston and Ottawa.
- Home sales are pushing into higher price points across the country. The luxury segment over $3 million represents approximately 4% of total sales in Metro Vancouver and 1.8% of sales in the GTA. Sales over $1 million in Halifax-Dartmouth represent 2.2% of total sales.
- Records were broken for luxury sales over $3 million in 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 rebounded from 2020, setting a record in the GTA and matching the existing record set in 2016 in Metro Vancouver. The GTA saw 106 condominium units sold in 2021, an increase of 82.8% over 2020 levels, while 144 units changed hands in Metro Vancouver, up 44% over the previous year.
The 2022 RE/MAX Canada Luxury Market Report includes data and insights supplied by RE/MAX brokerages. RE/MAX brokers and agents were surveyed on market activity and local developments based on local board data and market activity in 2020 and 2021. To view the full report, visit https://blog.remax.ca/canadian-luxury-real-estate-sales-double-triple-in-some-markets/.
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