Toronto leads Vancouver in luxury home market

Sales of homes in the $4-million-plus category rose 74% this summer, according to Sotheby’s.

TheStar.com
Sept. 13, 2016
By Tess Kalinowski

Bridle Path estates, Rosedale palaces and Forest Hill piles are outselling Vancouver’s famously expensive high-end mountain and oceanfront views, says luxury realtor Sotheby’s International Realty Canada.

Toronto’s lead in Canadian luxury home sales continued through the summer and is expected to carry on for the remainder of 2016, says the company’s fall forecast, published Wednesday.

Sales of $1-million-plus Toronto-area single-family homes rose 83 per cent year over year in July and August. That’s 3,026 homes, with 55 per cent of them inside Toronto’s borders. Meanwhile, Vancouver saw a decline of 30 per cent in July and 65 per cent in August, for a total of 288 sales of $1-million-plus homes.

That’s not entirely surprising given that the average cost of a detached home in Toronto was about $1.2 million, said Sotheby’s CEO Brad Henderson.

“While $1 million is still a considerable amount of money, it’s difficult to find a single-family home in the city of Toronto for less than $1 million and it is not uncommon to find homes in the $2-million, $3-million or even $4-million-plus range,” he said.

Sotheby’s says sales of homes in the $4-million-and-up category rose 74 per cent in the region and 58 per cent in the city in July and August.

That continues the trend identified in the first six months of 2016. A July report from Sotheby’s showed sales of detached homes in the $4-million-and-up range had increased 79 per cent year over year.

The Sotheby’s report also suggests there are signs that foreign home buyers, put off by the new 15-per-cent real estate tax in Vancouver, are considering other Canadian markets.

That tax signals more than a financial penalty for non-Canadian buyers, Henderson said.

“What the (Vancouver) tax introduced is ... some uncertainty as to what other policy issues the city or the province may introduce, which would adversely affect investors,” he said.

Those investors are looking elsewhere, including cities outside Canada.

“But, if they are looking in Canada, we believe Toronto will be the most logical place for people to consider. Montreal and Calgary will probably also get a look-see,” Henderson said.

He cited statistics from web-based hub Juwai, which bills itself as “the most integrated platform connecting international agents and Chinese buyers.”

“They recently reported ... an 81-per-cent drop in the numbers of inquiries on that website for Vancouver and a 146-per-cent increase in inquiries for Toronto,” Henderson said.

Although those won’t necessarily lead to more Toronto-area purchases, “it’s certainly an indicator that interest is moving from Vancouver to other markets,” he said.

Sotheby’s report forecasts a “more normalized fall market” in Vancouver, based on summer sales there.

On Tuesday, the chief economist and strategist at National Bank of Canada predicted Vancouver’s housing market may enter a correction with price declines of at least 10 per cent.

“There is a downside to single-family homes in Vancouver,” after policy changes in the past year, such as higher down-payment requirements and the provincial tax on foreign buyers, said Stefane Marion. Price declines will be moderated by the province’s strong job growth, he said.

“I don’t think it sends the economy into a tailspin. It’s a healthy correction,” Marion said.

Ten per cent of homes sold in the Toronto region in the first six months of 2016 were $1 million or more, according to Sotheby’s. Sales over $4 million comprised less than .05 per cent of the total transactions, according to Sotheby’s.

Strong GDP growth, low unemployment, well-paying jobs and its position as Canada’s leading city continue to make Toronto an attractive place for people immigrating and raising their families, Henderson said.

There are many pockets of larger, high-quality homes outside the city, too, he said, citing parts of Mississauga, eastern Oakville, King City, Kleinburg, Caledon, Markham, Richmond Hill and Aurora.

With files from Bloomberg

Toronto leads in luxury

65%

Increase in Toronto area homes that sold for $1 million or more in the first six months of 2016, compared to the same period last year.

35%

Increase in number of homes sold for $1 million or more in the city of Toronto in the first half of the year, compared to the same six months of 2015.

26%

Increase in $1 million-plus homes sold in Vancouver during the first six months of the year, compared to last year’s first half.

Sotheby’s International Realty Canada