GTA expected to lead country in luxury home sales

The GTA is expected to lead the country, outpacing even Vancouver, for high-end house and condo sales into early 2015, according to a new forecast from luxury realtor Sotheby’s International Realty Canada.

Strong demand for homes over $1 million — sales were up 34 per cent in the Toronto area in the first six months of 2014, year over year — is being fuelled by increased immigration and international buyers, low interest rates and strong consumer confidence, says Sotheby’s in its forecast released Thursday.

“Overall there is a ton of confidence. The reality is that Canadians are wealthier today than they’ve ever been,” says Sotheby’s realty president and CEO Ross McCredie.

Not to be underestimated — and a major reason the average detached home now costsclose to $1 million in Toronto — is the shortage of homes for sale, which is playing out in bidding wars.

That’s even a problem increasingly impacting Toronto’s luxury condo sector, says the forecast, based on recent high-end sales and a report on luxury sales in the GTA, Vancouver, Calgary and Montreal for the first half of 2014, released by Sotheby’s International Realty Canada in July.

Just a year ago, the city was seen as having a worrisome glut of pricey condo units because of the flood of new luxury hotel/condo projects such as the Four Seasons, Ritz-Carlton, Shangri-La and Trump.

Some 36 per cent of Toronto condos that sold for between $1 million and $2 million in the first six months of this year sold at or over asking price, often because of multiple offers, says Sotheby’s. So did 41 per cent of the condos sold between $2 million and $4 million.

Ironically, says Toronto-based Sotheby’s agent Paul Maranger, wealthy downsizing baby boomers and their grown children are increasing finding themselves looking for the same places — well-appointed $1-million-plus condos with top amenities in great downtown neighbourhoods close to the core.

“The high-end condos that are completely ‘done’ sell exceedingly well,” says Maranger. Far less so older luxury units needing the added costs and “emotional capital” of major renovations.

“We’re seeing dramatically improved showing activity and a tightening in the (high-end) condo market that is the antithesis of a year ago when the perception was that the market was saturated.”

Almost 3,000 single-family homes sold for over $1 million across the GTA in the first six months of 2014, some 37 per cent over list price, says Sotheby’s. That’s up from the 27 per cent that sold over list price in the same period of 2013, according to the report.

Another 600 sold for $2 million and up, more than 20 per cent over list price. That’s up from the 12.63 per cent that sold over list price in the first six months of 2013.

Demand for Toronto real estate remains strong among the growing ranks of the world’s rich, says McCredie. Wealthy baby boomers are also fuelling the market through a combination of buying and selling as investments, downsizing themselves and helping their kids break into the market.

Vancouver is expected to see “modest but positive momentum” in sales of homes over $1 million, lead by detached homes, says the Sotheby’s forecast. Sales of houses and condos were up by 34 per cent in Vancouver the first half of 2014 over the same period of last year.

Calgary is expected to see a more balanced market to the end of this year after a shortage of inventory drove up prices, and bidding wars, and drove a 17 per cent increase in the sales of $1-million-plus homes in the first half of 2014.

That eased over the summer as more luxury homes, and condos, hit the market, notes the report.

Montreal has seen a resurgence of high-end sales since the election of a Liberal majority restored consumer confidence and a sense of political stability.