SOTHEBY'S INTERNATIONAL REALTY CANADA'S TOP-TIER FALL LUXURY MARKET REPORT
Canada’s housing market continues to balance the effects of population growth and declining mortgage rates against a slowing economy, rising geopolitical tensions, and wavering consumer confidence, resulting in a luxury market that remains steady, but reflected limited growth in the third quarter of 2024.
According to Sotheby’s International Realty Canada’s Top-Tier Real Estate: Fall 2024 State of Luxury Report, the luxury condominium market in two of Canada’s major urban centres, Toronto and Vancouver, have shifted into buyers’ territory with prices stabilizing as supply outstrips demand. While demand for luxury single family homes has remained resilient, overall market dynamics have evolved to better favour homebuyers in these two key markets, creating advantageous conditions for purchasing luxury homes in cities typically renowned for hyper-competition.
"In recent years, the demand for upward housing mobility across the conventional and luxury housing markets of Canada’s largest cities has risen to all-time highs. However, these aspirations have been out of reach for many Canadians due to skyrocketing housing prices and intense competition for available property inventory. This fall, homebuyers and investors are set to encounter some of the most favourable conditions in years for purchasing or upgrading their homes as top-tier property listings supply increases, interest rates decline, and housing prices stabilize or even decrease in certain communities. This trend is especially evident in the once fiercely competitive markets of Vancouver and Toronto, as well as across the luxury condominium sector,” says Don Kottick, President and CEO of Sotheby’s International Realty Canada. “Although we expect the luxury market to remain largely stable in the coming months, over the longer term, there is no doubt that population growth will intensify competition for housing. Further, rising building costs and ongoing bureaucratic and policy barriers will only discourage construction. This means that there is an opportunity to take advantage of the favourable homebuying conditions we are seeing today.”
According to Don Kottick, it has taken the better part of a year for Canada’s luxury real estate to absorb the effects of multiple interest rate cuts by the Bank of Canada, as homebuyers in this segment are typically insulated from rate changes as they utilize cash reserves and strong financial positions. However, the cumulative effect of interest rate cuts has permeated market sentiment, instilling confidence and spurring transactions among those who wish to capitalize on elevated inventory levels and variable interest rates, or preparation for strategic real estate transactions in the months ahead. Should additional rate reductions take place before year-end, pre-transactional activity is likely to translate into a substantial boost in sales.
Toronto Highlights
In the country’s largest luxury real estate market, the Greater Toronto Area (GTA), overall residential real estate sales over $4 million (condominiums, attached and single family homes) remained consistent year-over-year between July 1–August 31, with a nominal uptick of 3%. Although single family home sales over $4 million saw a modest 4% annual improvement, $4 million-plus condominium sales fell 25% from last summer’s levels. GTA residential sales over $1 million were down 11% year-over-year over the summer months. Preliminary fall activity indicates similar trends ahead, as $4 million-plus residential sales in the GTA saw an annual increase of 9% between September 1–30. During this period, single family home sales over $4 million were up 9% year-over-year, while one condominium sold over $4 million, on par with September 2023. GTA residential sales over $1 million remained in balance with a 2% year-over-year uptick this September.
Market Highlights
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Canada's luxury real estate market maintained a steady level of sales activity in the third quarter of 2024 as a slowing economy and geopolitical conflict eroded consumer confidence even as declining mortgage rates and population gains buttressed the housing market.
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As single family home demand continued to dominate the high-end housing market, luxury condominium sales slackened in Toronto and Vancouver, resulting in excess listings inventory, price drops and favourable terms for invest-minded buyers.
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Current conditions for luxury real estate buyers in the long-coveted cities of Vancouver and Toronto are the most favourable since 2017, according to Sotheby’s International Realty Canada experts, as excess supply and reduced competition enable prospective homeowners and investors to successfully secure properties at more attractive prices.
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Overall luxury real estate sales gained ground in the Greater Toronto Area, as residential sales over $4 million saw a 3% year-over-year uptick in July and August, while September sales were up a healthy 9% compared to September 2023.
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Vancouver’s luxury real estate market remained soft in the third quarter, as sales over $4 million fell 13% in July and August from last summer’s levels, while September sales declined 52% year-over-year.
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Calgary continued to post stand-out luxury market performance and sellers’ market conditions as record inter-provincial migration and immigration lifted $1 million-plus residential sales by 31% year-over-year in July and August compared to the summer months of 2023, with sales up 15% year-over-year in September.
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The luxury market had a strong third quarter in Montreal, as residential sales over $1 million increased 15% year-over-year in July and August, then surged in September to levels that were 83% above September 2023 transactions.
