Price of luxury soars in GTA real estate
$4-million-plus category sees biggest sales volume increase as price of average detached home hits $1.26 million
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Not so long ago, luxury real estate in Toronto started at $1 million. Today, a prestigious address with high-end finishes and fittings will cost more than twice that.
With the average Toronto detached home selling for $1.26 million in June, house hunters seeking real luxury are actually buying well beyond the $2 million range, said Maureen O’Neill, managing broker of Sotheby’s International Realty Canada.
Even buyers bidding on homes priced at more than $2 million are subject to the heartbreak of Toronto’s bidding wars and bully offers, she said.
The number of homes that sold for more than $1 million in Toronto during the first six months of this year actually exceeded the only hotter Canadian market, in Vancouver, according to Sotheby’s biannual Top-Tier Real Estate Report published Thursday.
The strongest sales volume increase in the GTA was in the $4- million-plus category. Although it accounts for a relatively small number of sales, the category increased 81 per cent in the first six months of the year. That is 134 super-luxury homes between January and June, compared to 74 in the same period last year, including detached and attached homes, as well as condos.
Sales of detached, single-family homes that cost more than $4 million were up 79 per cent year over year.
It’s not a matter of buyers in the lower price category being pushed past the $2 million mark, said O’Neill. If buyers can’t afford the luxury they want in the city they will move further out or find an alternative such as a high-end condo.
Simply put, she said, there are people that have a lot of money and consumer confidence is high.
“People today are used to living well because we’ve had such a good economy for so long and they can afford it.
There’s a lot of people who are getting these huge inheritances. They have their own money, plus they have money trickled down from family inheritances,” said O’Neill.
Foreign investment and a relatively low Canadian dollar are expected to continue driving the scorching Toronto and Vancouver property scenes, said Sotheby’s.
“This, along with the persistence of low interest rates and continued local consumer confidence and activity, will drive the $1-million-plus real estate market into the second half of 2016,” said the report.
O’Neill said she is buoyed by the sustained consumer confidence and strength of the GTA market.
But, she said, “If we had more inventory I’d feel a lot better about people being able to purchase homes comfortably. It doesn’t look like we’re going to get a lot on the market going into the fall. For every house on the market you’ve got 10 buyers.”
In tony neighbourhoods like Rosedale, Lawrence Park and Forest Hill, $2 million is increasingly the cost of the lot.
The house is often considered a tear-down, O’Neill said.
What are the amenities buyers seek when they’re buying past the $2-million range? Toys, a gourmet kitchen inside and out, or a backyard oasis.
“Instead of going up to Muskoka, they’ve got Muskoka in their backyard. They’re getting real luxury lifestyle with all the bells and whistles that go with it,” she said.
Sotheby’s luxury report comes a day after the Toronto Real Estate Board’s monthly sales figures showed the average price of a home in the Toronto region rose to $746,546 in June, up 16.8 per cent from the same month last year.
A detached home in Toronto cost $1.26 million on average in June.
The bulk of properties, 84 per cent, in the Sotheby’s luxury category are still in the $1-million to $2-million range.
Competition was still strong in the seven-digit category with 60 per cent of those homes selling for above the list price.
Ottawa recently announced a provincial working group to look at policy options for cooling the climbing Toronto housing market. It has also promised to look more closely into the extent that foreign investment is fuelling the high prices here and in the Greater Vancouver area.
The Toronto board says it will release additional research this year to contribute to that discussion.
“As the federal, provincial and local levels of government discuss housing policy in the coming months, issues affecting the lack of supply in the GTA should be of paramount importance,” said board president Larry Cerqua.
“There is no doubt that demand is at a record level, but would-be home buyers continue to face an uphill battle against a constrained supply of listings,” he said in a Wednesday release.