More luxury home buyers are considering property outside Toronto’s downtown where they get more for their money, says a national report released by Sotheby’s International Realty Canada.
The sale of $ 1-million-plus homes rose 29 per cent year over year in July and August in the Toronto region. But the gain was a more moderate 25 per cent in the core.
The boldest sales boost across the region this summer — 33 per cent — was in homes priced between $ 1 million and $ 2 million. Downtown saw a 31 per cent increase in the same period.
The move by more buyers to look outside the pricey city centre could be driven by lifestyle but money is probably the main factor, said Sotheby’s CEO Don Kottick.
“Maybe the trade-off of a bigger home and bigger lot compensates for the fact that commute times are longer,” he said.
But there could be an element of optimism too.
“There’s a shift toward improving transportation so maybe it’s a long-term view too — that something will be done to improve our gridlock,” said Kottick.
In the $ 2 million to $ 4 million range, sales increased 12 per cent year over year in the GTA, compared to nine per cent in the Toronto core.
But a decline in super-luxury homes costing $ 4 million or more continues. Those sales — a relatively small number — declined 17 per cent in the GTA and 23 per cent in downtown Toronto. Sotheby’s attributes that drop to a growing reluctance of top-end sellers to have their properties listed on the Multiple Listings Service now that a federal court ruling means the selling prices can be published on some online realtors’ websites.
Kottick acknowledged that Sotheby’s is known as a luxury brand. But he said 75 per cent of its sales are actually within the average range of home prices. In the Toronto region that is in the $ 1-million range.
“It’s an average price in Toronto, but it still represents a lot of money for a lot of people,” he said.
The report released Wednesday forecasts the strong summer sales extending through the fall. Preliminary data from the first 15 days of September, showed a 53 per cent increase in $ 1-million-plus homes in the GTA and a 42 per cent increase in downtown Toronto.
The report attributes the strength of the Toronto-area market to strong employment and the expectation of continuing low interest rates.
“Although lending rate fluctuations have a negligible effect on consumers in the ultra-luxury real estate market, steady and favourable borrowing costs will continue to support purchasers in the market for conventional and top-tier real estate under $ 2 million,” says the report.
At the same time, escalating global economic and political tension will make Canadian and Toronto real estate “an attractive asset.”
The report also says that the upcoming federal election will inject more uncertainty in the real estate market, and could mean some will choose to wait until after Oct. 21 to buy a home.
Sotheby’s is predicting that Vancouver’s real estate fortunes will rise at a more gradual rate after “prolonged uncertainty,” with “pent-up consumer demand trickling back into the market,” as housing prices moderate there.
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Montreal’s luxury home market could continue to break records but there is constrained inventory, says the report. Meantime, Calgary’s $ 1 million-plus market is expected to “remain muted.”
The Toronto Real Estate Board reported a 24.3 per cent year-over-year increase in home sales in July and a 13.4 per cent gain in August.
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