The world is going through a lot right now, and Canada’s real estate market is not immune to any of it – from poor or inconsistent economic conditions and rising mortgage rates to serious international conflict and environmental issues.
Perhaps surprisingly, then, is the fact that the luxury single-family home market is making a comeback, as Sotheby’s reports.
“The return of buyers and investors from the sidelines led to a surprising renewal of luxury sales activity across the country’s largest metropolitan areas, and this was most prominent in the market for luxury single-family homes,” says Don Kottick, president and CEO of Sotheby’s International Realty Canada.
Among many Canadians who strive to own a home, buyers in this segment have shown to be relatively adaptable and resilient throughout much chaos.
Pressure on sellers
“Prospective buyers are now reassessing the relative benefits of single-family home ownership. In a market where buyers and investors are increasingly empowered to negotiate and be selective in their property selection, sellers will be increasingly compelled to make compromises to enable a sale,” says Kottick.
The report found that the country’s luxury market went up in the third quarter, notably in the Calgary, GTA, Vancouver and Montreal regions. As well, with higher prices and carrying costs, the luxury condominium dwelling type slowed and prospective buyers considered what they wanted within other investment and housing options.
“Across virtually every major metropolitan market, we saw annual percentage gains in single-family home sales outpace that of luxury condominiums in the third quarter of 2023,” Kottick shares.
“In the near term, we expect pressure (on sellers) to be heightened in the luxury condominium market.”
How the major markets fared
The leader of the pack was Calgary, standing above other major Canadian centres’ annual percentage gains in $1+ million residential sales. The region enjoyed a 69 per cent year-over-year boost through July and August compared to the same time in 2022. September’s increase was even higher at 106 per cent.
The GTA picked up speed in July and August with a 32 per cent year-over-year jump in $4+ million residential sales. Things simmered down to a steadier pace in September when the large metropolitan region saw a 3 per cent annual climb.
Sales of $4+ million luxury properties in Vancouver almost doubled at 96 per cent year-over-year gains in July and August. That said, September sales dropped by 29 percent compared to the same month last year.
Montreal saw a 31 per cent year-over-year increase in residential sales of $1+ million through July and August, followed by a 4 per cent annual jump last month.
Thoughts on what’s to come
Kottick believes that, in the near term, record population growth in the country’s biggest metropolitan areas will remain paramount in steadying demand for both luxury and conventional housing. Luxury home buyers will continue to prove their “resilience and adaptability in an increasingly challenging market,” he says.
He feels Toronto will likely keep its position as Canada’s leading luxury market, though Calgary is not far behind and should continue to move forward with its status of this year’s high luxury sales performer.
As for Montreal and Vancouver, Kottick predicts that both luxury markets will walk a fine line as buyers still evaluate their choices in an ever-changing housing market.
The report mentions that local housing supply and demand should stand out as the main effects on market dynamics.
Read the full report here, including detailed market performance.
