Top-Tier Real Estate: 2023 Year in Review
Canada’s metropolitan luxury real estate market evolved over the course of 2023 as buyers emerged from the sidelines with newly altered housing preferences and sharpened priorities, as well as negotiating power that steadily increased as the year progressed. Although overall sales activity was subdued by a volley of stressors that ranged from economic and geopolitical shocks to interest rate hikes, persistent inflation and regulatory changes, high-end buyers remained engaged and strategic. By the end of 2023, as segments of the country’s major metropolitan markets saw softening prices, and an increase in inventory and conditions that leaned in favour of buyers, the collective resilience and preparation of affluent home buyers and investors became apparent. Following years of unyielding constraints on luxury housing supply, affluent buyers and investors were primed to seize opportunities for upward housing mobility in a favourable market with replenished inventory and still-limited competition, foreshadowing strategic sales activity in early 2024.
“In the aftermath of an era marked by soaring housing prices across Canada’s largest cities, the conventional and luxury real estate market continues to shift towards a period of opportunity for home buyers and investors. While prices remained resilient in the country’s most prestigious neighbourhoods for the better part of 2023, those areas in which new property listings began to accumulate are now seeing softening prices, and a greater willingness from sellers to adjust to market realities. Meanwhile, prospective luxury property buyers and investors have been strategically preparing for the right opportunity,” says Don Kottick, President and CEO of Sotheby’s International Realty Canada. “As properties are listed by motivated sellers in early 2024, buyers will have more options, considerable negotiating power and will face less competition than in years past. This is a window of opportunity for luxury buyers and ‘up-sizers’ to purchase a home to meet their lifestyle and investment needs before interest rates fall, competition stiffens and the market swings in the opposite direction.”
According to Kottick, market conditions have momentarily shifted the lifestyle and investment preferences of every generation of luxury homebuyer in favour of single family homes across Canada’s largest urban markets. Elevated condominium prices, rising maintenance fees and carrying costs, as well as unpredictable government regulation of the rental market have spurred buyers to assess the relative benefits of single family home ownership. Although softening competition and prices will offer motivated luxury condominium buyers with favourable opportunities in the near-term, Kottick maintains that the fundamentals of Canada’s luxury condominium market remain sound, and demand for developments bearing internationally-acclaimed luxury brands and meeting a global standard for luxury architecture and design will remain particularly resilient. Record-high population growth, demographic pressures, and the attractiveness of a “lock-and-leave” lifestyle will continue to support demand for condominium housing in the longer term.
MARKET HIGHLIGHTS
Greater Toronto Area
According to data released by Sotheby’s International Realty Canada, luxury sales activity in the Greater Toronto Area (Durham, Halton, Peel, Toronto and York) remained calm and confident throughout 2023 as high-end buyers strategically repositioned themselves to capitalize on emerging opportunities. Although residential real estate sales over $4 million (condominiums, attached and single family homes) experienced a 20% year-over-year decline overall, ultra-luxury sales over $10 million on Multiple Listing Service (MLS) were stable compared to 2022 levels with a nominal 5% shortfall. $4 million-plus sales of single family homes were down 22% year-over-year, while attached home and condominium sales over $4 million saw modest annual gains of 8% and 10% respectively. Overall, $1 million-plus residential sales were down 19% year-over-year in 2023.
Vancouver
Vancouver’s luxury real estate market experienced a dramatic transformation over the course of 2023, as single family homes emerged as a focal point for luxury buyers. Despite fluctuating consumer sentiment over the course of the year, residential sales transactions over $4 million closed the year 8% above 2022 levels, while sales over $10 million saw a significant 43% annual increase, buoyed by an uptick in ultra-luxury transactions in the third quarter of the year. Overall residential sales over $1 million fell 5% short of 2022 levels. Although the city’s luxury condominium and attached home sales over $4 million fell 36% and 33% year-over-year respectively, $4 million-plus single family home sales were up 14% year-over-year. Ultra-luxury single family home sales over $10 million on Multiple Listings Service (MLS) increased 36%. Overall in 2023, residential real estate sales over $1 million fell 5% short of 2022 levels.
Calgary
Calgary’s luxury real estate market continued to surpass the performance of Canada’s largest major metropolitan areas in 2023, as buoyant economic prospects, robust job gains and affordable property prices attracted record-setting net interprovincial migration and local housing demand. Positive consumer and investor sentiment set the tone for the city’s top-tier market, and residential sales over $1 million increased 13% year-over-year from 2022 levels. Sales over $4 million gained ground with nine properties sold, up from six properties sold in 2022. $1 million-plus single family and attached homes sales saw 12% and 14% annual sales gains, respectively, while condominium sales over $1 million climbed 26% year-over-year.
Montreal
Luxury sales activity in Montreal was uneven over the course of 2023, with an uptick in activity over the summer months before transitioning to a more balanced market towards the end of the year. $4 million-plus residential real estate sales experienced a 22% annual decline, while sales over $1 million fell 14%. Single family and attached home sales over $1 million were down 14% and 6% year-over-year respectively, while $1 million-plus condominium sales saw a more pronounced 21% annual decline.
This article was originally published in Sotheby’s International Realty’s Insight Art of Living blog in January 2024.
*Disclaimer
The information contained in this report references market data from MLS boards across Canada. Sotheby’s International Realty Canada cautions that MLS market data can be useful in establishing trends over time but does not indicate actual prices in widely divergent neighbourhoods or account for price differentials within local markets. This report is published for general information only and not to be relied upon in any way. Although high standards have been used in the preparation of the information and analysis presented in this report, no responsibility or liability whatsoever can be accepted by Sotheby’s International Realty Canada or Sotheby’s International Realty Affiliates for any loss or damage resulting from any use of, reliance on, or reference to the contents of this document.
