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$1 million-plus home sales surge 38% in GTA

Downsizing baby boomers, wealthy buyers fuelling surge in high-end home sales: Sotheby’s

Susan Pigg – Toronto Star

Wealthy buyers, baby boomers and foreign investors went on such a spirited real estate spending spree in 2014, they are “driving the GTA market more than ever” and making even the $1 million-plus condo a hot commodity.

The number of Toronto houses and condos that sold for over $1 million in 2014 surged by 38% over 2013 as “robust consumer demand” and a shortage of listings continued to drive house prices skyward, according annual Top-Tier Real Estate Report released Wednesday by luxury realtor Sotheby’s International Realty Canada.

Comment: Well it is mainly a function of higher prices. As all prices rise, the percentage that are priced at $1 million or above constantly rises. So the share of these properties in relation to the whole will rise every year. Remember, the AVERAGE detached house is almost $1 million. Average.

Million dollar Toronto homes
That far outstripped the 25% growth in million-plus sales in Canada’s priciest market, Vancouver, according to the report, which also looks at Montreal — recovering since the election of a Liberal majority government — and Calgary, facing uncertainty in the face of slumping oil prices.

Comment: Montreal has never had the real estate values of cities to the west, so it is not a fair comparison. And Calgary is now falling along with oil prices, so it is the wrong time to compare it as well.

“There are about 270,000 high-net worth families in Canada and there are more of them driving this market than ever before, especially in the GTA,” says Sotheby’s Canada president and CEO Ross McCredie.

“We don’t see any black clouds on the horizon, except maybe in Alberta. And that’s going to be a question of consumer confidence” in the face of slumping oil prices.

Some 7,527 condos and single family homes (detached, semis and townhomes) sold for over $1 million in 2014 across the GTA.

That’s a relatively small portion of the more than 90,000 homes that changed hands in the GTA in 2014. But the demand for multi-million homes — including high-end condos where sales were up 46% in 2014 — has been so strong, it’s actually been skewing national housing statistics, says McCredie.

Comment: Um, nope. Those sales are as much a part of the entire market as the $150,000 condos in Rexdale.

Realtors have even been seeing house-style bidding wars for some higher-end condos, he said.

Comment: Very, very few.

Demand both here and in Vancouver for higher-end homes is largely being driven by downsizing baby boomers and the wealthy, including foreign buyers, looking to Canada’s two biggest cities as stable, safe havens, said McCredie in an interview.

In fact, some foreign investors are increasingly looking to Toronto because it’s still more affordable than Vancouver, he added.

“The real story, maybe more in the GTA than anywhere else in Canada, is that the baby boomer is largely driving this market right now. They have a lot of money, they are inheriting a lot of money and they are giving away a lot of money.

Comment: The key is more that they are giving it away. Most boomers are not moving. But they are giving money to their kids to help them buy.

“They don’t really care if that condo they buy in Yorkville goes up or down. This is about lifestyle and not having to commute and helping their kids get into the housing market.”

Sales of GTA homes between $1 million and $2 million were up 39% in 2014, year over year, as bidding wars and a shortage of listings — especially in Toronto neighbourhoods within an easy commute to the core — helped drive prices further skyward, according to the report.

Sales of $2 million to $4 million homes were up 38% over 2013 and $4 million-plus sales were up 10%, says Sotheby’s.

Comment: Those are the ones that might have extra-wealthy or foreign buyers. In the $1-2 million range, it is more normal people. Seriously. Their first and second homes have gone way up in value and they can buy in the upper price ranges. Others get family help. But that group is less exciting than you would think.

“Entry prices” for a “luxury” condo, attached (semis or townhomes) and detached home in the City of Toronto now hover around $1.5 million, $2 million and $2.5 to $3 million respectively, it notes.

Million-plus sales were up 21% in Montreal, according to the report.

“Renewed political stability” saw high-end sales pick up after the Liberals trounced the Parti Quebecois last spring to form a majority government.

Calgary saw a 16% increase in high-end sales in 2014, but that was before slumping oil prices really started impacting the western economy.

Interest rates remain an unknown for 2015, as does the impact of oil prices on the Calgary market, acknowledged McCredie. But he predicted it would take a sizable rate hike — close to double digits, which is unlikely in the short term — to scare off high net-worth buyers.

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Contact Laurin Jeffrey for more information – 416-388-1960

Laurin Jeffrey is a Toronto real estate agent with Century 21 Regal Realty.
He did not write these articles, he just reproduces them here for people who
are interested in Toronto real estate. He does not work for any builders.

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Summary
$1 million-plus home sales surge 38% in GTA
Article Name
$1 million-plus home sales surge 38% in GTA
Description
The number of Toronto houses and condos that sold for over $1 million in 2014 surged by 38% over 2013 as "robust consumer demand" and a shortage of listings continued to drive house prices skyward.