Sotheby’s International Realty Canada recently released its 2017 Year-End Top-Tier Real Estate Report, announcing an increase in activity in the Greater Toronto Area’s (GTA) condo and attached home market.
When the Fair Housing Plan came into effect in April 2017, there was a noticeable decline in top-tier sales and market confidence across the GTA. The Fair Housing Plan mostly had a psychological impact on the top-tier market, and this waned by the fall.
2016 saw historic highs in the sale of $1 million plus homes, but there was a 5% increase last year. In the luxury market, $4 million plus sales increased 35% with 391 transactions.
“Underlying changes in housing supply, demographic trends and consumer expectations ignited unprecedented performance in the top-tier condominium and attached home segments of Toronto, Vancouver and Montreal,” says Brad Henderson, President and CEO of Sotheby’s International Realty Canada. “The Calgary market also gained ground as economic recovery continued in the city. Overall, Canada’s metropolitan top-tier real estate markets remained bastions of stability, in spite of intervention.”
The GTA’s condo market specifically had dramatic year-over-year increases. $1 million plus sales went up by 59% with 1,296 transactions. There were 21 condo sales over $4 million, which doesn’t seem like a lot, but it’s actually 91% more than in 2016.
Due to the affordability challenges in the GTA, more buyers are looking to the condo and attached home market. Younger buyers can basically only afford condos, and affluent baby boomers are retiring and also eyeing condo life. This means that condo inventory is dropping, and when supply can’t meet demand, prices go up.
Sotheby’s also states that foreign buyer activity remains stable, which puts a little bit of pressure on the condo and attached home market.
When it comes to single family homes, there were 17,286 sales over $1 million last year. This sounds like a lot, but when you consider the average resale price of a detached home in the GTA was more than $1 million last year, it’s not that hard to believe.
Sales of $4 million plus single family homes increased by 34% year-over-year with 365. Think about that – that averages out to one $4 million plus home sold every day of 2017.
It will be interesting to see if top-tier sales remain at historic high levels throughout 2018. Between March and December last year the average home sale price dropped more than $220,000 in the GTA.
$1 million plus homes require at least a 20% downpayment, and with the new stress test in place, there could be fewer sales this year as borrowing power is lowered.