Pandemic accelerated value of home ownership at luxury price points to new heights in major Canadian Centres in 2021, says RE/MAX Canada
Luxury home sales double and triple year-over-year as buyers seek properties across the country
MISSISSAUGA, ON and KELOWNA, BC, Jan. 20, 2022 /CNW/ -- Demand for Canadian luxury properties shifted into high-gear from coast to coast in 2021 as both domestic and non-resident consumption of tangible assets such as residential real estate reached new levels, according to a report released today by RE/MAX Canada.
"The currency of home ownership has clearly taken on a new dimension in 2021," says Christopher Alexander, President, RE/MAX Canada. "Canadians are moving to secure their future. The pandemic fuelled a run on real estate that has encompassed every segment of the market, and the value of housing has increased exponentially as a result–not only as a form of shelter but a desirable asset class that provides an attractive return on investment."
The RE/MAX Canada 2022 Luxury Market Report examined trends and developments in sales of freehold and condominium properties priced over $3 million in Metro Vancouver and the Greater Toronto Area (GTA) and tracked sales over $1 million in 17 additional Canadian housing markets, including Victoria, Kelowna, Edmonton, Calgary, Regina, Winnipeg, London, Kitchener-Waterloo, Hamilton, Barrie, Kingston, Ottawa, Halifax-Dartmouth, Moncton, Saint John, Charlottetown and St. John's.
According to an analysis of sales provided by RE/MAX brokers and agents based on local real estate board data, RE/MAX Canada found that 18 of the 19 markets analyzed recorded percentage increases in the double and triple digits. The greatest appreciation occurred in smaller urban markets such as Barrie, London, Kitchener-Waterloo and Hamilton, where sales of homes priced over $1 million have climbed 517.8 per cent, 255.1 per cent, 208 per cent and 199.5 per cent respectively. Canada's largest markets for luxury product – the Greater Toronto Area and Metro Vancouver – experienced increases of 112.8 per cent and 75.8 per cent respectively for homes over the $3-million price point, while transactions of homes priced over $10 million rose a substantial 156 per cent and 167 per cent respectively. The only outlier was Charlottetown, where sales over $1 million declined to four units, down from seven unit sales one year earlier.
"As high as these numbers are, we believe they just scratch the surface," says Alexander. "In our view, these levels likely do not truly reflect what is happening in markets across the country, given an abundance of exclusive sales and in white-hot markets such as Toronto, instances of private sales where buyers approach sellers whose listings have expired."
Last year marked the continuation of a pandemic-fuelled buying spree that started in 2020, shattering existing records for luxury home sales and in some instances, price points from coast to coast.
"Despite a third and fourth wave of Covid-19 in 2021, real estate markets continued to rattle and hum," says Elton Ash, Executive Vice President, RE/MAX Canada. "Tight inventory levels were prevalent in at least half of the markets we surveyed and contributed to an uptick in values across much of the country."
RE/MAX brokers who were surveyed for the report attributed the increase in luxury activity to abundant economic drivers, as the national roll-out of the vaccines continued. Stock markets rallied, with the TSX, the S&P and the Nasdaq reporting some of their best years on record. Interest rates remained at historically low levels. GDP growth for the year is estimated at 4.5 per cent in 2021 as businesses returned to pandemic norms–including hybrid schedules—restaurants, bars, gyms, sports venues and theatres finally opened their doors.
Trade-up activity was brisk in most markets, as buyers cashed in on substantial equity gains realized when selling their existing properties.
"More so than ever before, it appears that buying a home is a retirement strategy which many people believe will help that next generation achieve home ownership," says Ash.
Real estate has traditionally been an essential asset class in the investment portfolios of ultra-high net worth individuals, usually comprised of multi-unit residential, commercial, industrial, and land. Residential performance, however, has been undeniable over the past decade, and that has generated global attention. Financial communities have also tapped into the trend, with Real Estate Investment Trusts (REITs) now investing in single-family residential housing in the US and to a lesser extent, Canada.
REPORT HIGHLIGHTS:
- Luxury home-buying activity is spilling into smaller centres where the dollar goes further. While the pandemic accelerated the trend, bigger bang for the buck is likely to continue to draw purchasers from larger centres, particularly in Ontario. Inventory is reaching critical levels in markets like London, Kitchener-Waterloo, Hamilton, Barrie, Kingston and Ottawa.
- Home sales are pushing into higher price points across the country. The luxury segment over $3 million represents approximately four per cent of total sales in Metro Vancouver and 1.8 per cent of sales in the GTA. Sales over $1 million in Halifax-Dartmouth represent 2.2 per cent of total sales.
- Records were broken for luxury sales over $3 million in the Greater Toronto Area in 2021, while Metro Vancouver fell short of 2016 record levels by just over 200 sales.
- Condominium sales over the $3 million price point in the GTA and Metro Vancouver have rebounded from 2020, setting a new record in the GTA and matching the existing record set in 2016 in Metro Vancouver. The GTA saw 106 condominium units sold in 2021, an increase of 82.8 per cent over 2020 levels, while 144 units changed hands in Metro Vancouver, up 44 per cent over the previous year.
- RE/MAX brokers have reported an upswing in non-resident buyers in Metro Vancouver and Halifax-Dartmouth in 2021, however domestic buyers continue to drive luxury sales in the Greater Toronto Area.
- An increase in young entrepreneurs has been noted in the GTA, with some utilizing crypto-currency gains to make their way into the housing market. Family wealth has also contributed to the increase in luxury home sales, with many parents freeing up the reins so the kids can enjoy the fruits of their labour.
- Despite the existence of three taxes aimed at foreign ownership in Metro Vancouver – the 20-per-cent Foreign Buyer Tax, the two-per-cent Speculation and Vacancy Tax (SVT), and the three-per-cent Empty Home Tax and the 15-per-cent Non-Resident Speculation Tax targeting sales in Ontario's Greater Golden Horseshoe Area—non-resident buyers are returning to Canada's residential housing markets.
- Sales of building lots have declined at the top end as buyers are reluctant to embark on construction when costs are unclear, labour is hard to find, and supply chain disruptions can add years to the custom-building process.
- Inventory is balanced over the $3 million price point in Metro Vancouver while just 200 such homes are currently listed for sale in Toronto proper. Supply levels are exceptionally low in 50 per cent of markets surveyed for this report, including the GTA, Victoria, Kelowna, London, Kitchener-Waterloo, Hamilton, Barrie, Kingston and Ottawa.
About the 2022 Luxury Market Report:
The 2022 RE/MAX Canada Luxury Market Report includes data and insights supplied by RE/MAX brokerages. RE/MAX brokers and agents were surveyed on market activity and local developments based on local board data and market activity in 2020 and 2021.
About the RE/MAX Network
As one of the leading global real estate franchisors, RE/MAX, LLC is a subsidiary of RE/MAX Holdings (NYSE: RMAX) with more than 140,000 agents in over 8,600 offices across more than 110 countries and territories. Nobody in the world sells more real estate than RE/MAX, as measured by residential transaction sides. RE/MAX was founded in 1973 by Dave and Gail Liniger, with an innovative, entrepreneurial culture affording its agents and franchisees the flexibility to operate their businesses with great independence. RE/MAX agents have lived, worked and served in their local communities for decades, raising millions of dollars every year for Children's Miracle Network Hospitals® and other charities. To learn more about RE/MAX, to search home listings or find an agent in your community, please visit remax.ca. For the latest news from RE/MAX Canada, please visit blog.remax.ca.
Forward looking statements
This report includes "forward-looking statements" within the meaning of the "safe harbour" provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as "believe," "intend," "expect," "estimate," "plan," "outlook," "project," and other similar words and expressions that predict or indicate future events or trends that are not statements of historical matters. These forward-looking statements include statements regarding housing market conditions and the Company's results of operations, performance and growth. Forward-looking statements should not be read as guarantees of future performance or results. Forward-looking statements are based on information available at the time those statements are made and/or management's good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. These risks and uncertainties include (1) the global COVID-19 pandemic, which has impacted the Company and continues to pose significant and widespread risks to the Company's business, the Company's ability to successfully close the anticipated reacquisition and to integrate the reacquired regions into its business, (3) changes in the real estate market or interest rates and availability of financing, (4) changes in business and economic activity in general, (5) the Company's ability to attract and retain quality franchisees, (6) the Company's franchisees' ability to recruit and retain real estate agents and mortgage loan originators, (7) changes in laws and regulations, (8) the Company's ability to enhance, market, and protect the RE/MAX and Motto Mortgage brands, (9) the Company's ability to implement its technology initiatives, and (10) fluctuations in foreign currency exchange rates, and those risks and uncertainties described in the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission ("SEC") and similar disclosures in subsequent periodic and current reports filed with the SEC, which are available on the investor relations page of the Company's website at www.remax.com and on the SEC website at www.sec.gov. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Except as required by law, the Company does not intend, and undertakes no duty, to update this information to reflect future events or circumstances.
SOURCE RE/MAX Canada
Danielle Scott, APEX PR, [email protected], 416-909-5185; Lydia McNutt, RE/MAX Canada, [email protected], 905-301-5980; Eva Blay-Silverberg, Point Blank Communications: 416.505.0627, [email protected]
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