Demand for high-end houses, and condos, driven by wealthy locals and return of international investors
Sales of luxury homes hit record levels in more than two-thirds of Canadian cities last year — including Toronto — thanks to surging stock markets, renewed consumer confidence and shortage of enough showcase homes to meet demand, according to a new report by ReMax realty.
Even Hamilton/Burlington, Kitchener-Waterloo and London-St. Thomas smashed previous sales records for high-end properties in 2013, says the report released Tuesday, which looks at trends over the last five years.
Vancouver’s market, which saw a dramatic slump in both sales and prices in 2012, led the way in 2013 with a 36 per cent increase in high-end sales.
That’s largely because Asian buyers started snapping up grand properties again and developers expanded the “teardown trend” of razing older homes and replacing them with mansions, even on the periphery of desirable neighbourhoods.
However, even the sale of some 1,609 properties over $2 million, among them the most expensive condo in the country — a $25 million, 6,500 square foot penthouse in the Coal Harbour-area Fairmont Pacific Rim hotel — wasn’t quite enough for Vancouver to better its record 1,880 luxury sales in 2011.
Calgary wasn’t far behind with a 34 per cent surge in high-end sales, followed by Edmonton at 32 per cent, Hamilton-Burlington at 31 per cent, Kitchener-Waterloo at 27 per cent and Toronto at 18 per cent, with almost 2,000 properties changing hands in 2013, according to the ReMax report.
But there’s lots of room for negotiation: Most high-end properties tend to sit on the market for months and usually sell below asking price — almost $4 million less for that Vancouver condo — even if there are multiple bids.
As well, what amounts to “luxury” varies dramatically, from just $500,000 in smaller markets like London, according to ReMax, to $750,000 in Hamilton/Burlington, $1 million-plus in Calgary, more than $1.5 million in the GTA and $2 million and above in what remains Canada’s priciest city by far, Vancouver.
The demand for showcase homes in most of Canada’s major cities reflects a trend that’s taken hold in major global cities as economies have started to rebound, stock markets have surged and, along with them, the number of the world’s millionaires, which now stands at about 12 million people worldwide who have more than $1 million U.S. to invest.
In London in the UK, the report notes, sales of homes over $8 million climbed by 24 per cent, and U.S. homes priced at $1 million or more are outstripping other sales by three to one.
“Canada’s luxury housing market has undergone serious transformation in recent years,” says ReMax vice president Gurinder Sandhu. “The market is maturing and the appetite is unprecedented.”
Even condos are commanding sky-high prices. In fact, that two-level, three-bedroom Coal Harbour penthouse, with its library and rooftop terraces, sold for over $6 million more than the priciest Vancouver house, an 8,000 square foot home with tennis courts and views of both mountains and water.
Some 92 condos sold for over $1.5 million across the GTA in 2013, up from 80 a year ago, says ReMax. And there was a 75 per cent jump, year over year, in the number of condos, 49 in total, sold for over $2 million — the priciest being an almost 3,500 square foot condo, $6.3 million Yorkville condo.
Across the GTA, where a shortage of all price ranges of lowrise houses are impacting prices, realtors such as Barry Cohen are seeing an unusual phenomenon play out even in homes listed over $1.5 million — bidding wars.
Competition has been especially fierce among high net worth househunters in areas like Rosedale, Forest Hill, Lawrence Park, Bridle Path, Hogg’s Hollow and Oakville.
“In 2012, the high-end market just froze starting in July until the following June (of 2013), then it was like a green light came on,” says Cohen. He had his best year ever in 2013, including the sale of a Park Lane Circle mansion (albeit, at one time listed for $20 million), that sold for $13.4 million with five offers.
Cohen expects high-end sales across the GTA to break records again this year, driven largely by wealthy locals looking to move up and international investors looking for a safe place to park their money, and their family.