Canada

Luxury market maintains a steady pace

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If you’re like many prospective homebuyers, you’ve been taking a wait-and-see approach when it comes to real estate but don’t wait too long. Once market prices stabilize, buyers who’ve been sitting on the sidelines will return and market competition will accelerate yet again, perhaps even as early as this fall.

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“Canada’s real estate market is returning to a steadier pace after an unprecedented growth period. While some buyers are continuing to monitor the market and the Bank of Canada’s interest rates, this provides an opportunity for eager buyers to negotiate deal terms and price on properties, unlike recent years,” says Anthony Hitt, president and CEO, Engel & Völkers Americas.

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The average sales price in the $1 million to 3.99 million range in Montreal, Que. climbed 14 per cent from last year.
The average sales price in the $1 million to 3.99 million range in Montreal, Que. climbed 14 per cent from last year. Photo by ENGEL & VÖLKERS

‘ATTRACTIVE INVESTMENT’

“We find that interest rate increases are not as disruptive to the ultra-premium markets, as these buyers tend to purchase homes with the majority of the equity paid upfront. We expect luxury markets to remain stable in Canada, as real estate remains an attractive investment.”

After years of exponential price growth, Engel & Völkers reports a “wave of normalization” that was triggered by the Bank of Canada’s decision to hike interest rates is taking place from coast to coast. According to its 2022 Mid-Year Luxury Real Estate Market Report, residential construction costs grew by 25 per cent year-over-year in the first quarter of 2022, which means the resale market is poised to be “favourable” for homebuyers and investors alike.

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Zoocasa’s list of most viewed homes in June included multi-million-dollar luxury estates. Topping the list was a $6.998-million family estate with nine bedrooms, 10 bathrooms and an elevator on two acres of land in Rocky View County, Alta.

The number of days a house in luxury pockets of cities like Toronto, Vancouver, B.C. and Montreal, Que. has increased slightly,” says Lauren Haw, CEO and broker of record at Zoocasa. In those cities, a home that’s very similar to the ones beside it might sit on the market a little longer than it would have in the height of the real estate frenzy.

Condos in the $1 million to 3.99 million range in Toronto saw the average sold price climb by just four per cent from last year, signalling the onset of balanced market conditions.
Condos in the $1 million to 3.99 million range in Toronto saw the average sold price climb by just four per cent from last year, signalling the onset of balanced market conditions. Photo by ENGEL & VÖLKERS

‘CREAM OF THE CROP’

But homes that are the “cream of the crop” are still commanding multiple offers, says Haw. “Interestingly, the pockets that are bit more expensive and where homes turn much less frequently are still seeing multiple offers. Sometimes the multiples might go slightly under asking but it just shows that interest is there. Few and far between are the days where things went drastically over asking prices but that unique luxury market – meaning you’ve got something like an extra wide lot that backs onto a ravine or a one-in-a-lifetime kind of property – is still selling quickly.”

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Steven Green, a sales representative and luxury market expert with Royal LePage Real Estate Services Ltd. in Toronto, agrees. “The high-end market is still pretty stable and as busy – if not busier – as it was during the height of the pandemic boom. I’m showing more luxury properties now than I did during the spring market. These luxury homes are unique in many ways, from having indoor pools to multi-car garages, with unique architectural design elements,” he says.

Listings are constantly coming to market. “Luxury home sellers are patient and are typically willing to wait for their desired price,” Green says. “Listings such as these sometimes need more and longer exposure to the market in order to attract the proper buyers who understand the features and finishings they offer, as they are not cookie-cutter properties.” 

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Real estate website Point2’s September list of the most expensive homes on the market in every Canadian province and in the nation’s 25 largest cities included a $59.8-million home in Vancouver. The 12,400-square-foot, five-bedroom home boasts Italian marble floors, a massive chef’s kitchen, wok kitchen, gym and rooftop deck with fireplace to enjoy panoramic views.

Sales volume across all price categories is down, but the number of condos priced between $1 million and 3.99 million sold is up 136 per cent year-over-year. This home is in Victoria.
Sales volume across all price categories is down, but the number of condos priced between $1 million and 3.99 million sold is up 136 per cent year-over-year. This home is in Victoria. Photo by ENGEL & VÖLKERS

At No. 2 is a $39.9-million, 18,800-square-foot estate nestled in untouched woods in Lac-Tremblant-Nord, Que., followed by a $29.8-million home in Toronto with six bedrooms, a separate detached guest suite and 14 garages. Sitting at No. 5 on the list is the most expensive home in Nova Scotia: a 9,500-square-foot lodge on a private 10-acre island that was designed with security, seclusion and self-sustainability in mind. Arrive by boat or helicopter.

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PRIORITIES SHIFT

Even as the market evolves, the pandemic will continue to “colour the way we see the future and the way we want to live in the future,” Hitt predicts. “Maybe during the pandemic, luxury meant more outdoor space,” he says, pointing to the exodus from urban centres to rural areas and cottage country.

But as restaurants, theatres and the other amenities that drew people to cities to begin with reopen, many are returning to urban centres because they realize that’s what luxury means to them. “People will look at their priorities a little differently than they did prior to the pandemic, and I think that’s what we’re seeing in the real estate market.”

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