Luxury housing sales surge forward in most major Canadian centres in 2012, says RE/MAX. New records set in 50 per cent of markets in the first quarter!
Growing confidence in Calgary’s residential housing market has spilled over into luxury properties, with first-quarter sales over the $1 million price point the best on record since 2007. One hundred and fifteen homes changed hands between January 1 and March 31st of this year, up from 106 during the same period in 2011, 67 in 2010, 35 in 2009, and 86 in 2008. Only 2007 posted greater sales activity in the top end, with 124 sales priced in excess of $1 million. The vast majority of sales so far this year have occurred at the lower end of the market, priced from $1 million to $1,249,999 (61 vs. 34), compared to one year ago, where more sales took place at higher price points. While some buyers are still somewhat tentative at the very top end of the market, sentiments are starting to change in tandem with Calgary’s slow and steady economic growth.
The overall market appears to be healthier than in recent years, finally heading in the right direction, with home buying activity gaining traction across the board. Locals are primarily behind the push, trading up to larger homes or lot sizes, taking advantage of today’s low interest rates and more affordable housing values. Movement back into Calgary—in the form of transfers from international corporations—is also a trend worth noting. A good selection of upper-end product is available in the City of Calgary where more than 400 properties are currently listed for sale. Inventory is noticeably tighter closer to the inner core, especially in older, established areas like Elbow Park, Bonavista, and Mount Royal. Proximity to the downtown core, walking trails, and trendy areas are top of mind with purchasers who are ‘location specifi c and price sensitive.’ The most expensive sale in the first quarter occurred at $2,950,000 in the city’s inner core, while the priciest condominium apartment, boasting more than 2,300 ft., sold for just over $ 2 million in Downtown. The most expensive property, situated on the shores of the Elbow River, offers up 5,100 plus sq. ft. of living space, including a media room, at $7,990,000. With recovery underway and first-time buyers heading back into the market, the domino effect is starting to take hold. The province is poised for significant growth in the future, given the population shift identified in the 2011 census. As such, the outlook for residential real estate at virtually every price point is exceptionally positive.
– Re/Max Upper-End Market Trends Report 2012
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(May 16, 2012) – From red-soled shoes to designer handbags, performance automobiles to high-end real estate, the Canadian appetite for luxury products continues to escalate.
Demand for upscale homes is sweeping much of the country, with upper-end sales in the first quarter of 2012 well ahead of 2011 figures for the same period, according to a report released today by RE/MAX. The Upper End Report found that 81 per cent (13) of the 16 major Canadian centres examined—including Victoria, Edmonton, Calgary, Regina, Saskatoon, London-St. Thomas, Kitchener-Waterloo, Hamilton-Burlington, Greater Toronto, Ottawa, Quebec City, Greater Montreal, and Halifax-Dartmouth—posted an increase, with the vast majority reporting double-digit appreciation. Records were set for upper-end sales in eight markets in Ontario, Quebec and Nova Scotia.
“Canadians recognize and appreciate the stability of real estate,” says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. “Given volatility in other areas, housing has emerged as a blue-chip asset among the country’s most affluent individuals. The capital gains exempt status ups the appeal, particularly as we see ongoing fluctuations in stocks and uncertainty in Europe. All the variables have come together to support an upper end market firing on all cylinders.”
The greatest percentage increase was reported in Regina, where first quarter sales of luxury homes priced over $500,000 climbed 56 per cent year-over year (50 units vs. 32 units). Quebec City placed second, posting a significant 50 per cent upswing in activity, while Toronto followed closely with a 49 per cent gain. The mid-sized markets of London-St. Thomas (43 per cent) and Kitchener-Waterloo (39 per cent) rounded out the Top Five—demonstrating that upper-end enthusiasm is not exclusive to Canada’s larger centres.
“While the ranks of the rich expand in both population and wealth, their impact on the Canadian residential landscape is undeniable,” says Michael Polzler, Executive Vice President, RE/MAX Ontario-Atlantic Canada. “Their confidence abounds from coast-to-coast, irrespective of price point. Starting prices range from a low of $500,000 in markets like St. John’s and Halifax-Dartmouth to a high of $2 million in Greater Vancouver, and affluent homebuyers are still prepared to up the ante—choosing to further renovate or altogether teardown and custom build to suit their needs.”
The report also noted that although the top end of the market represents only a small proportion of overall residential sales, when measured in terms of dollar volume, luxury sales are a much larger part of the equation. As such, the strong momentum out of the gate speaks to the overall confidence in real estate. Yet, several factors have worked in tandem to fuel the surge in demand for high-end properties in 2012, among them:
– Equity Gains – Price appreciation has been a serious catalyst fueling move-up activity in major Canadian markets in the past decade, providing current homeowners with the financial wherewithal to make more significant moves. In fact, from 2000 to 2010, average price gains in major Canadian markets ranged from a low of 68 per cent in London-St. Thomas to a high of 173 per cent in Regina. The same factor has pushed an increasing share of homes into upper end price points.
– Stock market volatility – Recent volatility in the stock markets, particularly the TSX, has once again shifted the focus to bricks and mortar. Investors continue to feel the pressure of serious headwinds (Economic signals from China appear worrisome, and the fragile U.S. recovery continues be dogged by weakness in the labour markets. Rising borrowing costs have threatened Spain, while austerity measures have fallen short in the U.K., and push back continues in France and the Netherlands). With equity markets quick to react to signs of stress, some are opting to shift money elsewhere.
– Immigration – Immigration has played a key role in bolstering Canada’s population of High Net Worth (HNW) Individuals. A recent BMO Harris Private Banking study showed that Canadians of foreign decent account for almost one-third of all high net worth wealth throughout Canada and that almost all (96 per cent) keep the bulk of their wealth in Canada. In 2010, Canada admitted roughly 154,000 business and investor immigrants who reportedly inject $2 billion into the Canadian economy each year.
– Changing Fortunes – Economic tides have turned in provinces like Saskatchewan, Newfoundland and Nova Scotia—contributing to the upswing in upper-end home sales. For markets like Saskatoon, Regina and St. John’s, million-dollar home sales used to be a rare phenomenon. With changing fortunes, these markets are playing catch up, building high-end homes where there once were few.
– Rebound in global wealth – The number of high net worth individuals (HNWI), along with their overall financial wealth, increased once again in 2010, surpassing the 2007 pre-crisis peak in nearly every region, according the the Capgemini/Merrill Lynch World Wealth Report 2011. While North America is still home to the greatest portion of HNWI, the population of HNWI in Asia-Pacific is now the second-largest in the world, unseating Europe’s long-held position. The segment of Ultra-high net worth individuals is also on the upswing. The rising ranks of the world’s rich have driven up demand for all things luxury.
“The strength of the upper-end is underpinned by solid fundamentals,” says Sylvain Dansereau, Executive Vice President, RE/MAX Quebec. “Most markets remain largely balanced across the board, with stable or modest price growth forecast in the luxury segment. Inventory levels have played a role in some multiple offer activity, with shortages notable in Montreal, throughout Ontario, and Winnipeg. While selection may be adequate in other markets, the demand and competition for quality stands out. Buyers at this price level are very discriminating. They are raising the bar nationwide, altering the Canadian housing landscape in the process.”
Highlights:
– Canadian upper-end homes are redefining luxury. When it comes to bells and whistles, toys and technology, the features homeowners are incorporating into their residences are becoming decidedly more progressive.
– While financing is not a huge concern for those spending multi-millions, purchasers at entry-level price points are ensuring peace of mind by locking in on five-year money.
– Canadian upper-end communities are an increasing reflection of Canada’s diverse multicultural and ethnic mosaic.
– Luxury condominiums continue to account for growing percentage of upper end sales, with most rivaling the grandeur of single-family product. Case in point is a unit recently listed in Toronto’s Yorkville district for $28 million.
Greater Vancouver’s Westside is home to the most expensive properties listed and sold in Canada this year. The priciest sale, $19.8 million, occurred in Point Grey for a 10,700 sq. ft. home with ocean and mountain views. A $31.9 million palatial historic home in Shaughnessy sports the highest sticker price. RE/MAX is Canada’s leading real estate organization with over 18,700 sales associates situated throughout its more than 720 independently-owned and operated offices in Canada.
The RE/MAX network, now in its 38th year, is a global real estate system operating in 87 countries, with over 6,200 independently-owned offices and over 87,000 member sales associates. RE/MAX realtors lead the industry in professional designations, experience and production while providing real estate services in residential, commercial, referral, and asset management. For more information, visit: www.remax.ca
Jackie Ostash
Public Relations Coordinator
RE/MAX of Western Canada
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