Pandemic accelerated value of home ownership at luxury price points to new heights in major Canadian centres in 2021

Demand for Canadian luxury real estate shifted into high-gear from coast to coast in 2021 as both domestic and non-resident consumption of tangible assets, such as homes, reached new levels, according to a report released today by RE/MAX Canada.

The RE/MAX 2022 Luxury Market Report examined Canadian luxury real estate trends and developments in freehold and condominium sales over $3 million in Vancouver and Toronto, and tracked sales over $1 million in 17 additional markets including Victoria, Kelowna, Edmonton, Calgary, Regina, Winnipeg, London, Kitchener-Waterloo, Hamilton, Barrie, Kingston, Ottawa, Halifax-Dartmouth, Moncton, Saint John, Charlottetown and St. John’s.

RE/MAX Canada found that 18 of the 19 markets recorded percentage increases in the double and triple digits. The greatest appreciation occurred in smaller urban markets such as Barrie, London, Kitchener-Waterloo and Hamilton, where sales of homes priced over $1 million have climbed 517.8%, 255.1%, 208% and 199.5% respectively. Canada’s largest markets for luxury product – Toronto Area and Vancouver – experienced increases of 112.8% and 75.8% respectively for homes over the $3-million price point, while transactions of homes priced over $10 million rose a substantial 156% and 167% respectively. The only outlier was Charlottetown, where sales over $1 million declined to four units, down from seven unit sales one year earlier.

Last year marked the continuation of a pandemic-fuelled buying spree that started in 2020, shattering existing records for Canadian luxury real estate sales and in some instances, price points from coast to coast.

The report attributed the increase in luxury activity to abundant economic drivers, as the national roll-out of the vaccines continued. Stock markets rallied, with the TSX, the S&P and the Nasdaq reporting some of their best years on record. Interest rates remained at historically low levels. GDP growth for the year is estimated at 4.5% in 2021 as businesses returned to pandemic norms–including hybrid schedules—restaurants, bars, gyms, sports venues and theatres finally opened their doors.

Trade-up activity was brisk in most markets, as buyers cashed in on substantial equity gains realized when selling their existing properties.

Real estate has traditionally been an essential asset class in the investment portfolios of ultra-high net worth individuals, usually comprised of multi-unit residential, commercial, industrial, and land. Residential performance, however, has been undeniable over the past decade, and that has generated global attention. Financial communities have also tapped into the trend, with Real Estate Investment Trusts (REITs) now investing in single-family residential housing in the US and to a lesser extent, Canada.

Canadian Luxury Real Estate Highlights

• Luxury home-buying activity is spilling into smaller centres where the dollar goes further. While the pandemic accelerated the trend, bigger bang for the buck is likely to continue to draw purchasers from larger centres, particularly in Ontario. Inventory is reaching critical levels in markets like London, Kitchener-Waterloo, Hamilton, Barrie, Kingston and Ottawa.
• Home sales are pushing into higher price points across the country. The luxury segment over $3 million represents approximately four per cent of total sales in Metro Vancouver and 1.8% of sales in the GTA. Sales over $1 million in Halifax-Dartmouth represent 2.2% of total sales.
• Records were broken for luxury sales over $3 million in Toronto in 2021, while Vancouver fell short of 2016 record levels by just over 200 sales.
• Condominium sales over the $3 million price point in the GTA and Metro Vancouver have rebounded from 2020, setting a new record in Toronto and matching the existing record set in 2016 in Vancouver. Toronto saw 106 condominium units sold in 2021, an increase of 82.8% over 2020 levels, while 144 units changed hands in Vancouver, up 44% over the previous year.
• RE/MAX reported an upswing in non-resident buyers in Vancouver and Halifax-Dartmouth in 2021, however domestic buyers continue to drive luxury sales in Toronto.
• An increase in young entrepreneurs has been noted in Toronto, with some utilizing crypto-currency gains to make their way into the housing market. Family wealth has also 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.
• Non-resident buyers are returning to Canada’s residential housing markets, despite the existence of three taxes aimed at foreign ownership in Vancouver – the 20% Foreign Buyer Tax, the 2% Speculation and Vacancy Tax (SVT), and the three-per-cent Empty Home Tax and the 15% Non-Resident Speculation Tax targeting sales in Ontario’s Greater Golden Horseshoe Area.
• Sales of building lots have declined at the top end as buyers are reluctant to embark on construction when costs are unclear, labour is hard to find, and supply chain disruptions can add years to the custom-building process.
• Inventory is balanced over the $3 million price point in Vancouver while just 200 such homes are currently listed for sale in Toronto. Supply levels are exceptionally low in 50% of markets surveyed for this report, including Toronto, Victoria, Kelowna, London, Kitchener-Waterloo, Hamilton, Barrie, Kingston and Ottawa.