Sotheby’s International Realty Canada released its top-tier 2018 spring market forecast, predicting the luxury home market will normalize in the Greater Toronto Area (GTA), based on sales transactions through the MLS system.
In 2017, the $1 million-plus market stayed steady with a 5% year-over-year increase to 20,623 sales. The $4 million-plus market jumped 35% to 391 sales.
Clearly, 2017 was a big year for the top-tier market, so comparing the first two months of 2018 to 2017 will make this year look pretty weak. Considering the record highs last year, Sotheby’s believes 2018 is off to a strong start.
Top-tier GTA sales in January and February 2018 dropped 55% in the $1 million-plus market with 1,498 sales. The $4 million-plus market fell 56% with 31 sales. In Toronto, top-tier sales fell 39% and 50% in the $1 million-plus and $4 million-plus markets, respectively.
Regarding the GTA’s $1 million-plus condo market specifically, 2017 saw a 59% increase over 2016, with a 35% increase in Toronto. With a strong demand for condos, Sotheby’s expects this activity to remain stable into spring 2018.
In the first two months of the year, the $1 million-plus condo market is only 10% lower compared to the record highs last year. Affordability challenges in the single-family home market will push more baby boomers and young families to larger condos, which can cost more than $1 million.
“Rising prices and the lack of affordable options is continuing to pressure the Toronto and Vancouver markets. Consumers are deadlocked in their ability to buy and move – their diminishing willingness to transact is slowing activity,” says Brad Henderson, President & CEO of Sotheby’s International Realty Canada.
When it comes to the new uninsured mortgage stress test that kicked in on January 1, 2018, only buyers in the $1-2 million market have felt any “anxiety” towards it. Buyers in the $4 million-plus market are sitting comfy and actually experienced a dip in supply and rising prices.
There were 15,700 jobs added in February 2018, year-over-year employment growth increased 4%, and the unemployment rate is below the national average at 5.5%. Overall, the GTA’s economic health, supply issues and strong demand for top-tier condos are signs of a healthy spring for the top-tier market.
If you’re looking to invest in a top-tier market that is expected to boom this spring, you may want to check out Montreal.
“Montreal has been Canada’s ‘dark horse’ in luxury real estate,” says Henderson. “For many years, political uncertainty and a stagnant economy tethered performance, but those factors have now dissipated. This spring, we expect strong gains that will set new records for the city.”