Canada's luxury home market is intense as trade-up and non-resident activity adds pressure to tight supply
Buying a home at the pricier end of the market is increasingly challenging as demand outstrips supply.
While the luxury housing market may have traditionally been the domain of ultra-high-net-worth individuals, equity gains elsewhere in the Canadian housing market is bringing a new cohort of buyers to the sector.
Non-resident buyers, next-gen entrepreneurs, and even those who have profited from cryptocurrencies are also among those active in the luxury housing market.
A new report from RE/MAX Canada highlights how residential real estate is cementing its place as an asset class to grow family wealth.
“Canadians are moving to secure their future,” said Christopher Alexander, president, RE/MAX Canada. “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.”
Large sales gains
The report found that 18 of the 19 markets analyzed recorded double- and triple-digit percentage increases. The analysis included home sales above $1 million in 17 markets, and above $3 million in the GTA and Vancouver.
The largest sales gains were seen in smaller urban markets such as Barrie (518%), London (255%), Kitchener-Waterloo (208%) and Hamilton (200%).
The GTA also posted a three-digit rise (113%) and Vancouver saw a 76% rise. Even in homes sold at $10 million or more transaction volume was up 156% in the GTA and 167% in Vancouver.
“As high as these numbers are, we believe they just scratch the surface,” says 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.”
The report notes an increase in young entrepreneurs in the GTA, with some utilizing cryptocurrency gains to make their way into the housing market.
It also highlights how family wealth has contributed to the increase in luxury home sales, with many parents freeing up the reins so the kids can enjoy the fruits of their labour.
“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,” said Elton Ash, RE/MAX Canada’s executive vice-president.
Tight supply
For clients looking to get into the luxury market it could be a big ask in many markets.
Inventory is balanced over the $3 million price point in Metro Vancouver while just 200 such homes are currently listed for sale in Toronto proper.
Half of the markets included in the report have exceptionally low supply levels including the GTA, Victoria, Kelowna, London, Kitchener-Waterloo, Hamilton, Barrie, Kingston, and Ottawa.
