Canada’s pandemic real estate craze goes all the way to the top, according to new data compiled by Sotheby’s International Realty Canada.
The report, which tracks sales of properties priced over $1 million, $4 million and $10 million, shows triple-digit growth in major cities across Canada in terms of the number of luxury homes and condos that switched hands in the first half of 2021 compared to the first half of 2020.
“We’re seeing this right across the country for the first time in a long time: all the major (urban) centres are basically firing on all cylinders,” says Don Kottick, president and CEO of Sotheby’s International Realty Canada.
He is optimistic that momentum will carry forward to 2022, even as Ottawa promises to implement a tax on empty properties owned by foreign non-residents.
“All the indicators are leading into a strong bull market going into 2022,” he says.
4:40 What is vacancy tax and how can it change Toronto’s housing market?
What is vacancy tax and how can it change Toronto’s housing market?
Luxury sales soaring above pre-pandemic levels
While the onset of the COVID-19 pandemic briefly sent homes sales plunging in the spring of 2020, this year’s sales of luxury homes are strong even when compared to pre-pandemic sale volumes.
The Greater Toronto Area, for example, recorded 414 properties sold for over $4 million in the first six months of 2021, up around 300 per cent compared to the 103 such properties sold over the first half of 2019.
Overall, $1 million-plus residential sales surged to 29,394 transactions between January and June of 2021, up roughly 240 per cent compared to the 8,612 transactions above $1-million recorded over the same period in 2019.
The data likely reflects both frenzied buying and selling activity as well as the fact that soaring valuations are pushing a larger number of properties above the price threshold that has traditionally been considered “luxury.”
Nationally, sales volumes reached an all-time record in March, before settling at lower but still historically extraordinary levels in April and May, according to the Canadian Real Estate Association.
Home prices have also skyrocketed across much of Canada, with the national average home price reaching a little over $688,000 in May 2021, up a whopping 38 per cent from the same month last year.
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The luxury market is having a moment right across the country, according to Sotheby’s report. In Vancouver, the number of homes selling above $10 million was up 300 per cent year-over-year. Montreal saw the sale of a $12.9 million condo, which broke Quebec’s historic record for condominium prices on the multiple listing service (MLS).
And even in Calgary, sales of single and attached homes saw healthy activity, with 615 properties selling for over $1 million in the City of Calgary, although sales of condos above that priced remained a very small percentage of the market, according to the report.
According to Kottick, the factors that propelled sales in the upper echelons of Canada’s real estate are the same ones that fuelled homebuyers’ fever in the rest of the housing market: record-low interest rates, a desire for bigger properties and more space, and a chronic undersupply of homes.
The luxury market has moved “in tandem” with the broader market, coming to a virtual halt in March and April but then quickly recovering and progressively heating up through the summer and fall of 2020 and through the winter, reaching eye-popping sales volumes in the spring of 2021.
Like in the rest of the market, sales activity has tempered a little lately, though it remains strong, Kottick says. He believes it’s just a temporary “breather.” As Canada’s reopens its borders to immigration while interest rates remain low, the pressure from buyers will build up again, he predicts.
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National tax on foreign homeowners looming
Even a looming federal tax on vacant and underused properties held by foreign homeowners won’t do much to slow down Canada’s luxury real estate market, Kottick believes.
As eye-popping home price increases put the dream of homeownership out of reach for many young Canadians, the Trudeau government has vowed to impose a nationwide levy on foreign homeowners aimed at clamping down on international speculators.
The tax is expected to yield $700 million in additional revenues over four years starting in 2022-23, money Ottawa says will be used to improve housing affordability for Canadians.
British Columbia has a 20 per cent land-transfer tax for foreign buyers in some regions, along with an additional speculation levy on empty homes, while Ontario’s 15 per cent tax applies to foreign buyers investing in certain cities.
But with immigration grinding to a halt during the pandemic, the vast majority of those snapping up the country’s multi-million-dollar homes over the past year have been Canadians, according to Kottick. At first, it was affluent buyers upgrading to larger properties, leaving downtown urban centres or moving across provinces. Then mostly domestic investors joined the fray, he says.
“Real estate is now considered an asset class,” he says.
With the reopening of the border, he expects international demand for Canadian housing to come back from both foreign investors and immigrants regardless of the new federal tax.
Some economists reckon even an empty-homes tax targeted narrowly at foreign buyers may send a chill through the housing market, curbing the “fear of missing out” mentality that has anecdotally gripped buyers in many parts of the country.
Still, some housing experts argue government efforts to cool the market should focus broadly on all investors.
“Any policies that should be put in place should just be geared towards investors, period, whether domestic investors or foreign investors,” John Pasalis, president of Realosophy Realty in Toronto, previously told Global News.
To discourage buyers from purchasing property only to flip it after a short period and pocket the gain from rapid appreciation, Ottawa could impose a tax on residential real estate sales with the rate gradually falling to zero over five years of holding the property, BMO senior economist Robert Kavcic wrote in a report in March.
“This could easily crowd out speculation and alter market psychology,” he wrote.
TORONTO – The Toronto Regional Real Estate Board says home sales in October surged as buyers continued moving off the sidelines amid lower interest rates.
The board said 6,658 homes changed hands last month in the Greater Toronto Area, up 44.4 per cent compared with 4,611 in the same month last year. Sales were up 14 per cent from September on a seasonally adjusted basis.
The average selling price was up 1.1 per cent compared with a year earlier at $1,135,215. The composite benchmark price, meant to represent the typical home, was down 3.3 per cent year-over-year.
“While we are still early in the Bank of Canada’s rate cutting cycle, it definitely does appear that an increasing number of buyers moved off the sidelines and back into the marketplace in October,” said TRREB president Jennifer Pearce in a news release.
“The positive affordability picture brought about by lower borrowing costs and relatively flat home prices prompted this improvement in market activity.”
The Bank of Canada has slashed its key interest rate four times since June, including a half-percentage point cut on Oct. 23. The rate now stands at 3.75 per cent, down from the high of five per cent that deterred many would-be buyers from the housing market.
New listings last month totalled 15,328, up 4.3 per cent from a year earlier.
In the City of Toronto, there were 2,509 sales last month, a 37.6 per cent jump from October 2023. Throughout the rest of the GTA, home sales rose 48.9 per cent to 4,149.
The sales uptick is encouraging, said Cameron Forbes, general manager and broker for Re/Max Realtron Realty Inc., who added the figures for October were stronger than he anticipated.
“I thought they’d be up for sure, but not necessarily that much,” said Forbes.
“Obviously, the 50 basis points was certainly a great move in the right direction. I just thought it would take more to get things going.”
He said it shows confidence in the market is returning faster than expected, especially among existing homeowners looking for a new property.
“The average consumer who’s employed and may have been able to get some increases in their wages over the last little bit to make up some ground with inflation, I think they’re confident, so they’re looking in the market.
“The conditions are nice because you’ve got a little more time, you’ve got more choice, you’ve got fewer other buyers to compete against.”
All property types saw more sales in October compared with a year ago throughout the GTA.
Townhouses led the surge with 56.8 per cent more sales, followed by detached homes at 46.6 per cent and semi-detached homes at 44 per cent. There were 33.4 per cent more condos that changed hands year-over-year.
“Market conditions did tighten in October, but there is still a lot of inventory and therefore choice for homebuyers,” said TRREB chief market analyst Jason Mercer.
“This choice will keep home price growth moderate over the next few months. However, as inventory is absorbed and home construction continues to lag population growth, selling price growth will accelerate, likely as we move through the spring of 2025.”
This report by The Canadian Press was first published Nov. 6, 2024.
HALIFAX – A village of tiny homes is set to open next month in a Halifax suburb, the latest project by the provincial government to address homelessness.
Located in Lower Sackville, N.S., the tiny home community will house up to 34 people when the first 26 units open Nov. 4.
Another 35 people are scheduled to move in when construction on another 29 units should be complete in December, under a partnership between the province, the Halifax Regional Municipality, United Way Halifax, The Shaw Group and Dexter Construction.
The province invested $9.4 million to build the village and will contribute $935,000 annually for operating costs.
Residents have been chosen from a list of people experiencing homelessness maintained by the Affordable Housing Association of Nova Scotia.
They will pay rent that is tied to their income for a unit that is fully furnished with a private bathroom, shower and a kitchen equipped with a cooktop, small fridge and microwave.
The Atlantic Community Shelters Society will also provide support to residents, ranging from counselling and mental health supports to employment and educational services.
This report by The Canadian Press was first published Oct. 24, 2024.
Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.
Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.
Average residential home price in B.C.: $938,500
Average price in greater Vancouver (2024 year to date): $1,304,438
Average price in greater Victoria (2024 year to date): $979,103
Average price in the Okanagan (2024 year to date): $748,015
Average two-bedroom purpose-built rental in Vancouver: $2,181
Average two-bedroom purpose-built rental in Victoria: $1,839
Average two-bedroom purpose-built rental in Canada: $1,359
Rental vacancy rate in Vancouver: 0.9 per cent
How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent
This report by The Canadian Press was first published Oct. 17, 2024.
