Upscale downsizing

Sales of GTA condos priced at $1 million or more have risen 98 per cent this year over 2016, according to a report that says Toronto remains Canada’s leading luxury real estate market.

Thestar.com
July 11, 2017
By Tess Kalinowski

They are the entry-level home of choice for cash-strapped first-time buyers in the Toronto area. But condos are now also appealing to the rich - even they have to downsize.

Across the GTA, condo sales on units priced at $1 million or more rose to 758 in the first half of 2017, a 98-per-cent increase over the previous year, according to a report Monday from Sotheby’s International Realty Canada. Across the region, sales of units priced at $4 million or higher rose 150 per cent, to 15 units.

Most of the region-wide sales activity - 670 condos - was in the $1-million to $2-million range. ‎That was a 99-per-cent increase over the 336 units that sold in that category during the first half of 2016.

In Toronto, sales in the $1-million-and-up category rose 66 per cent and accounted for 641 transactions.

Part of that increase is due to the overall rise in housing prices in the Toronto area, said Sotheby’s CEO Brad Henderson.

“Multi-unit residential (property), whether it’s condos or townhomes, is becoming a choice for move-up buyers or right-sizers because they’re looking to focus on something where it’s a bit more affordable and wanting to have a good address and still have enough space for their stuff and their lifestyle,” said Henderson.

Of the condos studied, those over $1 million sold fastest - averaging only 16 days on the market in Rosedale-Moore Park from March through June - said Sotheby’s, which surveyed five high-priced Toronto neighbourhoods in its mid-year Top-Tier Real Estate Report.

Luxury condos tended to linger longer in the Annex, taking 27 days on average to sell during the same period. The Bridle Path, Lawrence Park and Forest Hill fell in between.

Among the luxury condos on the market is Suite 703 of the Hazelton hotel and residences on Yorkville Ave.: nine rooms, five fireplaces and a wine cellar in 6,300 square feet, for $12.9 million.

Toronto remains Canada’s leading luxury real estate market, the report says. In the single-family home category, the Bridle Path remains the most expensive neighbourhood in the city, with an average sale price of $5.1 million in the first half of 2017. It was followed by Rosedale-Moore Park, where houses averaged $3.6 million; Forest Hill, at $3.7 million; and Lawrence Park, at $2.3 million.

Henderson expects the overall luxury market to remain strong even in the wake of the government’s market cooling program launched in April and an interest rate hike anticipated as soon as Wednesday.

“There’s no question, as people’s affluence increases, the effect of interest rates on them is not quite as profound as it would be on somebody who’s on a very tight budget,” he said.

“Most high-net-worth individuals use financing strategically rather than out of necessity. Even though they may have mortgages on some of their properties, they probably tend to be more home equity lines of credit, which give them the opportunity to borrow money against the property and use it for other investments or purchases,” Henderson said.

He noted, however, that if the Bank of Canada raises the interest rate 25 basis points as expected - even if it raises it another 25 points by the end of the year - the effect will extend to the entire country.

“If it goes up faster and higher, it will have a very strong, dampening effect on the market given where overall debt levels are in Canada. But we don’t expect that,” Henderson said.

Homes in the $4-million-plus category are a sliver of the housing market, representing only 258 house and condo sales out of the Toronto area’s 14,292 $1 million-plus transactions in the first six months of 2017.

But sales in that high-end market increased 93 per cent this year between January and June, compared to the same period last year, Sotheby’s says.

In the $2-million to $4-million price range, sales increased 51 per cent year over year.

Although the Sotheby’s national report considers luxury homes to be properties selling for over $1 million, that term hardly applies in Toronto, where 70 per cent of home sales were at or above that price.

Sales of homes over $1 million declined 31 per cent in June year over year, but in the $4-million-plus category, they fell only 6.25 per cent. In May, when $1-million-plus home transactions fell 5.42 per cent, $4-million-plus home sales more than doubled, said the report.