Toronto’s High-End Home Sales Defy GravityThe Star
By Wed., Jan. 11, 2017
By Wed., Jan. 11, 2017
Sales of $1-million-plus homes increased 77% last year and 95% on $4-million-plus properties.
The Toronto region continues to lead Canada’s luxury home market with a 77 per cent increase in properties valued over $1 million last year and an eye-popping 95 per cent gain in sales of $4-million-plus properties.
Given that the average Toronto area home now sells in the $1 million range, the vigorous sales of real estate in the $1 million to $2 million range isn’t necessarily surprising, said Brad Henderson, CEO of Sotheby’s International Realty Canada, which released its annual luxury home sales report on Wednesday.
The gravity-defying success of the top-end of the luxury market, however, is a good indication of the strength of Toronto and the surrounding region, he said.
“For the Greater Toronto Region to see a 95-per cent year-over-year increase in the number of homes sold (over $4 million) is certainly indicative of a very strong market at all levels,” said Henderson.
“There’s no question that in Toronto, anything above $2.5 million to $3 million is definitely considered luxury — so at $4 million plus, it’s definitely the luxury market.”
Sales in the Toronto area rose 86 per cent over 2015 in the $2 million to $4 million residential range, according to Sotheby’s year-end Top-Tier Real Estate Report.
It predicts that the Toronto area will continue its lead on luxury housing for a third year in 2017 as a ferocious appetite for property continues to outstrip the supply.
Henderson cited the region’s strong employment and above-average GDP growth, inspiring optimism among workers and homeowners compared to other parts of the country.
But he said realtors are watching the Canadian response to the rise of some U.S. interest rates.
“Vancouver is still in a pause and reflect mode,” said Henderson, who said the 15 per cent foreign-buyer tax introduced there last summer caught a lot of people off-guard.
The change and ensuing uncertainty may have caused some paralysis in the market, but he said, “our belief is that there’s an amount of unrealized demand in Vancouver.
“It remains to be seen how that is going to play out over the next months.”
Ontario’s premier and Toronto’s mayor have removed that uncertainty by saying they have no intention of pushing for a Vancouver-style tax here, he said.
Non-Canadian buyers looking for homes for themselves, for their children to attend school here or simply as an investment, are an important part of the market, said Henderson. But they represent only about 10 to 15 per cent of sales, he said.
The high cost of homes, particularly in the Toronto area, is also boosting luxury condo sales. There were 815 apartments sold in the $1-million-plus category in 2016, 51 per cent more than in 2015, with the biggest gains in the $1 million to $2 million range where sales were up 55 per cent.
Condos and townhomes are an affordable way for some professionals and families to stay inside the city. Where some house buyers may be going to the 905-region to get more house for their money, baby boomers are right-sizing and moving to some multi-unit properties with fewer bedrooms and better access to amenities.
“What we’re seeing is a shifting of the demand based on lifestyle preferences, where you’re seeing both demand for 416 properties increasing and also a demand for 905 properties increasing,” said Henderson.
People are adjusting to raising families in urban settings, and condos are being developed to provide the amenities that will appeal to those buyers.
Condo buyers in the $2-million plus price range are looking for guest suites and larger entertainment areas that allow them to occasionally accommodate visitors and big gatherings without investing in a bigger living unit.
Buying into the $1 million club
101%Increase in sales of attached homes costing $1 million or more in 2016, from 659 units in 2015 to 1,324 last year.
61%Toronto-area single-family homes in the $1 million to $2 million range that sold above the list price last year, compared to about 43% that sold over asking in 2015.
16,534Number of homes sold in the GTA in the $1 million to $2 million price range last year, compared to 9,425 in 2015.
34%Increase in sales volumes of Vancouver homes priced at $1 million or more, compared to 77% in the Toronto area.
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