Get it while it still hot, would be something people would be shouting if this were the case in Greater Toronto Area (GTA). We have seen a boom in the luxury real estate valuation. Let’s look a few numbers.
In the early days of 2021, the GTA witnessed residential real estate sales spiking 157 per cent year over year, and of those, five ultra-luxury properties sold over $10 million compared to the same period a year ago.
While luxury sales of condos priced at $4 million and above showed a decline from six to two units year over year, early signs show resiliency as the GTA’s $1 million-plus market shows growth of 110 per cent year-over -year in March.
Vancouver is also seeing signs of pent-up demand with sales of luxury attached homes priced between $1-2 million and $2-4 million up year-over-year, with 169 and 15 homes sold respectively in the first two months of the year. Calgary and Montreal were not left behind with impressive gains.
Numbers don’t lie and this is exactly something that I was aiming for to get out of all of this. So, the real question is what happened? Why so bullish?
Well according to CEO and President of Sotheby’s International Realty Canada, Don Kottick,
“The scenario that we are seeing with price gains and housing affordability are due to the fact that demand and supply are critically out of balance”
Adding onto the prior statement:
“We are facing unprecedented levels of consumer demand brought on by the pandemic and population growth, encouraged by low interest rates and pent-up cash savings. We have been in an acute shortage of housing for years in cities like Toronto and Vancouver.”
With the travel restrictions in place and low rates and continued savings there are reasons to believe that this will continue for the foreseeable future as well.
Real estate in Canada has been a winner in the past year and this is something that is started to raise question that is the market being overvalued? Well time would be playing a role inn bursting this bubble or maybe this is the new norm. we have seen other things go about some what a similar change and well things are changing around the world and Canada has been no stranger to the changes.
With the Federal Budget set to be unveiled April 19, there are whispers that we could see changes in an effort to slow things down, such as changes to the principal residence tax exemption, increased requirements for down payments, or even changes to refinancing levels.
“It puts the financial plans and the financial security of millions of Canadians at risk, and it also risks reducing housing supply even further, if people are discouraged from selling their homes.”
Kottick added to the conversation.
Some people like David Rosenberg fear that this is going to be the biggest bubble that the Canadian market has ever seen and it is going to be affecting a lot of people in the market and the economy as a whole.
While others like the former, bank of Canada governor Stephen Poloz acknowledged on BNN Bloomberg that yes there is some heat in the market but we could see signs of speculation. “but we have to accept that because otherwise we’d have a really, really bad recession”
The real question of where you stand with all of this can only be answered by whether you are buying or selling.
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