Canadian High End Real Estate Market is Sky Rocketing!
Welcome to Living in Ottawa. The Canadian high end real estate market has seen stunning growth over the past two years. Nowhere is that more evident than in high-end luxury home sales!
So what is a luxury home? Luxury for one homebuyer may be average for another. But a few characteristics tend to hold true for high end properties.
The first, of course, is location. Isn’t it always? Homes in desirable urban locations, on gorgeous coastal properties, or even in upscale suburbs or neighborhoods are more likely to fall into the luxury category.
Location alone is not enough. Luxury homes often have superior quality construction and finishings as well as decadent amenities. Lots of space, specialty rooms like theaters, and even guest houses are part of the luxury home scene.
These homes tend to be unique and some are well-known. They may be historically or architecturally significant, or have famous former residents.
The only tangible way to determine how the high-end Canadian real estate market is doing is to judge by price. Today we’ll talk about homes selling for over one million dollars, over three million dollars, and those in the stratosphere selling for over 10 million dollars.
Luxury home prices vary dramatically from place to place in Canada. In some markets, you can buy the most extravagant home in the city for a million dollars. In other places, most notably Toronto and Vancouver, that’s below the average home cost.
Those are the markets that see three, four, or 10 million dollar sales. And they have definitely seen them! In Toronto, home sales over 3 million dollars increased by 112.8% in 2021. In Vancouver, the increase was 75.8%.
Are you wondering about those 10 million dollar homes? Sales of those homes in Toronto increased 156% and in Vancouver 167% in a single year. 2021 saw a veritable boom in luxury home sales.
These are record-setting increases, far greater than the overall increase in home sales across Canada last year.
Luxury homebuyers moving to Ottawa or moving in Ottawa and able to spend over a million dollars accounted for 9% of home sales in 2021. That’s an increase from 2% in 2019. For homes costing over 4 million dollars, sales increased by 800%!
Making Sense of Percents
These percentages seem absolutely extraordinary. To get a better perspective on the scope of the high end real estate market in Canada, we need to look at some plain numbers. The market isn’t quite as extreme as it appears.
The very best example is right here in Ottawa. It’s true that sales of homes costing over 4 million dollars rose 800% from 2020 to 2021. Sales rose from one home in that price range in 2020 to nine in 2021.
Sometimes it can be hard to pin down sales growth in this market due to private sales. That means growth percentages vary depending on the source. In Vancouver, RE/MAX reported a 167% growth in home sales over 10 million dollars. Sotheby’s reported a 218% growth based on the Multiple Listing Service.
What does that really mean? In 2020 there were 11 sales through the MLS of 10 million or more. In 2021, there were 24. When absolute numbers are small, percent changes are magnified.
So yes, luxury home sales saw a lot of growth in 2021 compared to previous years, but the number of homes, especially at the highest price points, remained relatively low.
Average Home Prices And canadian high end real estate market
The same cannot be said for homes in the one million dollar price range. February of 2022 saw the average Canadian home price rise to $816,720. That’s up 20% from February of 2021 and puts the average very close to that one million dollar “luxury” point.
In markets like Toronto and Vancouver, average home prices are already over a million dollars. Luxury market reports don’t even include a property unless it’s selling for over three or four million. In others, like Halifax and Calgary, spending one million dollars places a buyer at the very top end of the market.
In Calgary, only four homes were sold for over 4 million in 2021, compared to two in 2020. No properties were sold for over 10 million in either year. RE/MAX reports that the average Calgary home price in 2021 was $463,900.
In Halifax, people moving to Canada can purchase far more luxurious homes for a million dollars than in Toronto, Vancouver, or Montreal. According to CREA, the average price for a home in Halifax in February of 2022 was $422,100.
The same is true right here in Ottawa. A home in a desirable neighborhood right in the city has a higher average price than one in a smaller community nearby.
Reasons for the Boom
Even with the relatively low numbers of homes in this category, the skyrocketing high end real estate market can’t be ignored. One reason for the low number of sales is low supply. There is increased demand for these homes, pushing prices higher.
So why are people looking at these high end properties now? Why have we seen such high demand for them over the past two years?
The answer may be in the pandemic, and in changes in the overall Canadian real estate market. As property values soared, and continue to rise, more people are seeing homeownership as an investment. Owning a home that will increase markedly in value can be valuable for retirement or passing on family wealth.
Despite programs in place to discourage it, investors are also purchasing single-family homes.
We may be seeing some shifting priorities as well. The pandemic forced us to look at what we want from our homes. We spent more time in them and maybe socked away some extra savings in the process.
Homebuyers may be deciding that a luxury home is best for their families and their futures. And for that, they are willing to pay a luxury price.
Keep tuning in to Living in Ottawa for updates on these high end homes and the rest of the Canadian and Ottawa real estate market.