As luxury home sales slow, here’s what’s on the market

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Following a strong summer, luxury real estate market sales in major Canadian cities are beginning to slow down, according to a new report from Sotheby’s International Realty Canada. But real estate experts say they’re still optimistic that the market will remain resilient through to early 2024.

The luxury real estate management brokerage’s fall report, released on Wednesday, shows that urban hubs such as the Greater Toronto Area (GTA) and Vancouver reported notable increases in annual sales throughout July and August before these gains moderated in September.

“In the summer, which tends to be a time when sales are a little lighter, we actually saw (July and August) increase in activity,” Don Kottick, president and CEO of Sotheby’s International Realty Canada, told CTVNews.ca in a telephone interview on Wednesday. “It’s almost like the fall shifted forward a couple months and now we’re in this kind of adjustment period.”

Referencing market data from MLS boards across the country, the report shows that luxury real estate sales of more than $4 million in the GTA rose 32 per cent in July and August year-over-year, with 74 properties sold. Three of these homes sold for more than $10 million, which is on par with activity recorded last summer.

In September, however, this annual gain dropped to three per cent, with 31 properties sold for more than $4 million and no sales exceeding $10 million.

Meanwhile, in Vancouver, luxury home sales saw an annual decline in September. Residential sales of more than $4 million increased 96 per cent year-over-year in July and August, with 55 properties sold. Four of these homes were sold for more than $10 million. But by September, sales were down 29 per cent compared to the same time last year, with 15 properties sold.

The boom in activity across both regions this summer was largely driven by pent-up consumer demand for single-family homes, the report states. Luxury homebuyers also did well to overcome challenges around elevated mortgage rates and home prices, Kottick said. But with activity normally reported in the fall having taken place over the summer, experts are noticing a drop in annual sales as buyers take a more cautious approach with their purchases, the report notes.

“Luxury buyers and investors are increasingly pedantic and discriminating in their property search, prolonging negotiations with the goal of securing a property that meets their housing criteria and lifestyle goals, at a price that does not surpass what is warranted in current market conditions,” reads the report.

Although luxury home sales are moderating, this is not “cause for concern,” according to Christopher Alexander, president of Re/Max Canada. Demand within the market remains strong, and this slowdown has not resulted in any massive fluctuations in pricing on an annual basis, he said.

“(Average prices) are up slightly in most markets, others are down … but it’s all nominal,” Alexander told CTVNews.ca in a telephone interview on Wednesday.

Ultimately, he predicts that average luxury home prices in Canada will increase by three to five per cent over the remainder of this year and into early 2024.

SALES SLOW IN MONTREAL AS CALGARY BOOMS

In Montreal, residential sales of more than $1 million saw an annual increase of 31 per cent over July and August, with 232 transactions recorded. Of those homes, nine were sold for more than $4 million, compared to eight properties sold during the same time last year.

In September, sales involving homes worth more than $1 million held steady with a four per cent increase year-over-year after 84 properties were sold. Of these transactions, three properties sold for more than $4 million.

Many of Montreal’s homebuyers also spent more time searching for and negotiating home sales in September, according to the Quebec Professional Association of Real Estate Brokers. The average number of days that single-family homes spent on the market increased to 46 days in September, compared to 34 days during the same month last year.

With a growing divide between buyer and seller expectations, Montreal’s luxury real estate market is expected to maintain more balanced conditions this fall, the report states.

Meanwhile, in Calgary, luxury real estate sales remained strong throughout the summer and into the fall. Residential sales of more than $1 million increased 69 per cent year-over-year in July and August, with 257 properties sold. Of these transactions, one home was sold for more than $4 million, similar to activity levels reported in 2022.

In September, sales involving homes worth more than $1 million increased by 106 per cent year-over-year. This growth can be attributed to population gains, partly due to interprovincial migration, as well as a lack of supply, the report states.

“It’s still the highest performing market in country,” Alexander said. “Calgary has had such lack of supply that it’s pushed prices to levels that have allowed buyers to buy into a luxury space that they might not have been able to otherwise.”

In other parts of the country, such as Atlantic Canada and the Prairie provinces, interprovincial migration is also helping drive luxury home sales and keep prices competitive, Kottick said. Ultimately, however, price levels and sales activity will vary from neighbourhood to neighbourhood, he said.

HOW ARE INTEREST RATES AFFECTING HOMEBUYERS?

The gap between housing demand and supply will continue to have a significant impact on the luxury home market this fall, Kottick said. The country’s real estate market as a whole has been under considerable pressure in recent months, with strong demand and low supply.

Annual gains in average home prices have been met with high interest rates and levels of inflation, leaving many to struggle with an elevated cost of living and an affordable housing crisis.

This is having a ripple effect on the luxury home market, Kottick said.

“One impact on any part of the spectrum is going to reverberate,” he said. “We need inventory stock right from subsidized housing … to a place where people can move up, which would be the luxury (homes) and the ultra-luxuries.”

But in terms of interest rates, luxury homebuyers tend to be more immune to the impacts of rate hikes, Kottick said. These homebuyers tend to have more assets and are less dependent on mortgages, Alexander explained. By extension, they are less affected by the elevated interest rate environment, he said.

“(The market) always has operated in its own kind of bubble,” said Alexander.

Although interest rates may not have as large an impact on luxury homebuyers, they continue to affect the market, Kottick said. Future decisions around interest rate hikes will determine the luxury real estate market’s trajectory in the months to come, Alexander said. If the Bank of Canada decides to hold or cut its key policy rate, this could spur more activity that might spill into the luxury market, he said.

Ultimately, Alexander said he expects sales to remain flat for the rest of the year, with “a healthy spring on the horizon.”

Meanwhile, Kottick said he remains optimistic that activity will pick back up in the next few months.

“People are transacting right now … there are a lot of buyers out there,” he said. “Going into the fall market, I think there there’s cautious optimism.”

CTVNews.ca has gathered a list of luxury homes currently listed for more than $1 million across the country. Scroll down to read more.

VANCOUVER

Type: House

Price: $35,888,000

Year Built: 2016

Property Size: 1,371.16 sq. m

Lot Size: 2,600 sq. m

This home in West Vancouver spans more than 1,300 square metres and has eight bedrooms and 11 bathrooms. The living and dining areas each feature limestone and marble fireplaces, and the gourmet kitchen includes a breakfast bar, pantry and quartzite countertops. The home also has a heated terrace and pool, as well as wine, theatre and steam rooms.

TORONTO

Type: House

Price: $28,000,000

Year Built: 1975

Property Size: 2,414.48 sq. m

Lot Size: 0.89 hectares

A total of eight bedrooms and 12 bathrooms can be found throughout this home in Toronto’s Bridle Path neighbourhood. Largely made of concrete, this home is surrounded by plenty of trees, offering privacy from neighbours. In addition to dining and family rooms, the property also has private indoor and outdoor swimming pools.

MONTREAL

Type: House

Price: $15,000,000

Year Built: 1910

Property Size: 667.79 sq. m

Lot Size: 1,462.36 sq. m

Located a short drive away from downtown Montreal, this three-storey home has five bedrooms and five bathrooms. Along with living, dining and kitchen areas, the main floor also features a walkout terrace. On the upper levels are bedrooms and bathrooms, and the basement includes a theatre room and wine cellar.

CALGARY

Type: House

Price: $8,980,000

Year Built: 2016

Property Size: 654.88 sq. m

Lot Size: 948 sq. m

Situated in Calgary’s Elbow Park neighbourhood, this riverfront home has more than 650 square metres of space. Its contemporary design includes concrete interior walls, oversized tile flooring and light oak millwork. A number of floor-to-ceiling windows can be found throughout the home, allowing for plenty of natural light.

OTTAWA

Type: House

Price: $7,000,000

Year Built: 2002

Property Size: 592.8 sq. m

Lot Size: 2,493 sq. m

This waterfront property with five bedrooms and six bathrooms offers views of the Ottawa River. On the main floor are the kitchen, dining area and a sunroom, while the upper levels include a family room as well as the primary bedroom, which has a private balcony and ensuite bathroom. The home also features a theatre room, wet bar, outdoor pool and hot tub.

HALIFAX

Type: House

Price: $6,990,000

Year Built: 2019

Property Size: 550 sq. m

Lot Size: 0.25 hectares

Spanning approximately 500 square metres, this Halifax home includes five bedrooms and five bathrooms. The custom house has a contemporary design that includes a living room with glass walls and a propane fireplace. On the upper floor, the main bedroom has a five-piece marble ensuite bathroom as well as a private balcony and dual walk-in closets.

NEW BRUNSWICK

Type: House

Price: $5,400,000

Year Built: 2018

Property Size: 410.07 sq. m

Lot Size: 55.71 hectares

Modern finishes can be found throughout this home in Wilsons Beach, N.B. On the main floor is the great room, complete with marble flooring and a maple ceiling. Also on the main level is the kitchen and dining area, which includes two ovens, two dishwashers and a 70-bottle wine fridge. Rounding out the rest of the home are five bedrooms, seven bathrooms, an exercise room with a sauna and a recreational room with a wet bar.

WINNIPEG

Type: House

Price: $4,790,000

Year Built: 1910

Property Size: 668.9 sq. m

Lot Size: 2,315.24 sq. m

Initially built in 1910, this Winnipeg home has since been completely remodified. Along with living and dining rooms, the main floor also has a kitchen that features a custom island and butler’s pantry. Throughout the rest of the home are seven bedrooms and seven bathrooms, as well as a library, music room and solarium. A hot tub and all-season pool both sit in the backyard.

PRINCE EDWARD ISLAND

Type: House

Price: $3,250,000

Year Built: 2009

Property Size: 1,207.46 sq. m

Lot Size: 1.21 to 4.05 hectares

With five bedrooms and 11 bathrooms, this home in Mill River East, P.E.I. spans more than 1,200 square metres. Built in 2009, the home took two years to construct, and includes kitchen, dining and living areas, as well as an in-ground pool and a partially finished basement. The two-storey waterfront home also offers views of Mill River.

NEWFOUNDLAND AND LABRADOR

Type: House

Price: $2,875,000

Year Built: 1998

Property Size: 503.16 sq. m

Lot Size: 5.32 hectares

This secluded home located just outside of St. John’s, N.L., has three bedrooms and four bathrooms. The waterfront property comes with exclusive use of a private marina, and offers views of the Atlantic Ocean and nearby woodlands. On the main floor of this two-storey home are living and dining areas, while the upper level includes the primary bedroom as well as a four-piece ensuite bathroom.

SASKATOON

Type: House

Price: $2,499,900

Year Built: 2005

Property Size: 266.45 sq. m

Lot Size: 517.93 sq. m

This five-bedroom, five-bedroom home is situated in Saskatoon’s Nutana neighbourhood and faces the Saskatchewan River. On the main floor is a custom kitchen as well as living and dining areas. A steel and maple staircase leads to the upper level, which includes a laundry room and the primary bedroom with a private balcony.