Wealthy buyers, baby boomers and foreign investors went on such a spirited real estate spending spree in 2014, they are “driving the GTA market more than ever” and making even the $1 million-plus condo a hot commodity.
The number of Toronto houses and condos that sold for over $1 million in 2014 surged by 38 per cent over 2013 as “robust consumer demand” and a shortage of listings continued to drive house prices skyward, according annual Top-Tier Real Estate Report released Wednesday by luxury realtor Sotheby’s International Realty Canada.
That far outstripped the 25 per cent growth in million-plus sales in Canada’s priciest market, Vancouver, according to the report, which also looks at Montreal — recovering since the election of a Liberal majority government — and Calgary, facing uncertainty in the face of slumping oil prices.
“There are about 270,000 high-net worth families in Canada and there are more of them driving this market than ever before, especially in the GTA,” says Sotheby’s Canada president and CEO Ross McCredie.
“We don’t see any black clouds on the horizon, except maybe in Alberta. And that’s going to be a question of consumer confidence” in the face of slumping oil prices.
Some 7,527 condos and single family homes (detached, semis and townhomes) sold for over $1 million in 2014 across the GTA.
That’s a relatively small portion of the more than 90,000 homes that changed hands in the GTA in 2014. But the demand for multi-million homes — including high-end condos where sales were up 46 per cent in 2014 — has been so strong, it’s actually been skewing national housing statistics, says McCredie.
Realtors have even been seeing house-style bidding wars for some higher-end condos, he said.
Demand both here and in Vancouver for higher-end homes is largely being driven by downsizing baby boomers and the wealthy, including foreign buyers, looking to Canada’s two biggest cities as stable, safe havens, said McCredie in an interview.
In fact, some foreign investors are increasingly looking to Toronto because it’s still more affordable than Vancouver, he added.
“The real story, maybe more in the GTA than anywhere else in Canada, is that the baby boomer is largely driving this market right now. They have a lot of money, they are inheriting a lot of money and they are giving away a lot of money.
“They don’t really care if that condo they buy in Yorkville goes up or down. This is about lifestyle and not having to commute and helping their kids get into the housing market.”
Sales of GTA homes between $1 million and $2 million were up 39 per cent in 2014, year over year, as bidding wars and a shortage of listings — especially in Toronto neighbourhoods within an easy commute to the core — helped drive prices further skyward, according to the report.
Sales of $2 million to $4 million homes were up 38 per cent over 2013 and $4 million-plus sales were up 10 per cent, says Sotheby’s.
“Entry prices” for a “luxury” condo, attached (semis or townhomes) and detached home in the City of Toronto now hover around $1.5 million, $2 million and $2.5 to $3 million respectively, it notes.
Million-plus sales were up 21 per cent in Montreal, according to the report.
“Renewed political stability” saw high-end sales pick up after the Liberals trounced the Parti Quebecois last spring to form a majority government.
Calgary saw a 16 per cent increase in high-end sales in 2014, but that was before slumping oil prices really started impacting the western economy.
Interest rates remain an unknown for 2015, as does the impact of oil prices on the Calgary market, acknowledged McCredie. But he predicted it would take a sizable rate hike — close to double digits, which is unlikely in the short term — to scare off high net-worth buyers.