Top-Tier Real Estate: Fall 2023 State of Luxury Report
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As the country’s housing market continued to wrestle with the challenges of elevated mortgage rates, uneven economic performance and intense geopolitical turbulence, reviving luxury single family home sales in the third quarter of the year revealed the relative resilience and adaptability of luxury real estate buyers, as well as Canadians’ unwavering desire to attain home ownership. According to Sotheby’s International Realty Canada’s Top-Tier Real Estate: Fall 2023 State of Luxury Report, luxury single family home sales in Canada’s largest residential real estate markets renewed in the third quarter of 2023, even as activity in the luxury condominium market tempered, a reflection of changing housing considerations, consumer preferences and financial strategies in light of rising housing prices and carrying costs.
“Over the summer months, Canadian luxury real estate buyers quietly overcame the challenges of higher mortgage rates, elevated home prices, uncertainty in the macro environment and ever-changing market conditions to fulfill their aspirations of housing ownership and mobility. The return of buyers and investors from the sidelines led to a surprising renewal of luxury sales activity across the country’s largest metropolitan areas, and this was most prominent in the market for luxury single family homes. In fact, across virtually every major metropolitan market, we saw annual percentage gains in single family home sales outpace that of luxury condominiums in the third quarter of 2023,” says Don Kottick, President and CEO, Sotheby’s International Realty Canada. “Across every generation of homebuyer, the allure of single family home ownership is enduring. Given the elevated prices and rising carrying costs of luxury condominiums, prospective buyers are now reassessing the relative benefits of single family home ownership. In a market where buyers and investors are increasingly empowered to negotiate and be selective in their property selection, sellers will be increasingly compelled to make compromises to enable a sale. In the near-term, we expect this pressure to be heightened in the luxury condominium market.”
According to Kottick, record-setting population gains in Canada’s largest metropolitan areas will continue to be pivotal in stabilizing demand for conventional and luxury housing in the short term, while luxury real estate home buyers are revealing their resilience and adaptability in an increasingly challenging market. As the epicentre of Canada’s economy and its most populated metropolitan area, Toronto will continue to hold steady as the nation’s leading luxury market; however, Calgary is poised to continue to assert itself as the country’s “breakaway” high performer in luxury sales in 2023, most notably with bold gains in its high-end single family home market. The Vancouver and Montreal luxury markets are poised to maintain a precarious balance as buyers continue to reassess their options in an unpredictable and evolving housing climate. Despite intensifying geopolitical turbulence, local housing demand and supply is anticipated to prevail as the primary influences on market dynamics this fall.
Market Highlights
Toronto
Across the country’s largest luxury real estate market, the Greater Toronto Area (GTA), residential real estate sales over $4 million (condominiums, attached and single family homes) were up 32% year-over-year between July 1– August 31 overall. While single family home sales over $4 million increased 37% year-over-year, $4 million-plus condominium sales retreated 25% from last summer’s levels. Overall, GTA residential sales over $1 million were up 10% year-over-year over the summer months. Initial fall activity foreshadows a steady market ahead, as sales over $4 million in the GTA saw an uptick of 3% year-over-year between September 1–30. During this time, $4 million-plus single family home sales saw an annual 25% gain while condominium sales over $4 million fell to one transaction from five sales in September 2022. Overall residential sales over $1 million fell a marginal 4% short of September 2022 sales.
Vancouver
Sales activity in Vancouver’s luxury real estate market revitalized in the third quarter of the year, propelled by a surge of unanticipated activity in the city’s single family home market. From July 1– August 31, overall luxury residential sales over $4 million were up 96% from the summer of 2022, with $4 million-plus single family home sales up 145% year-over-year while $4 million-plus condominium sales fell 25%. Overall, $1 million-plus residential sales were up 28% year-over-year during this time. Luxury activity in the month of September suggests consumer uneasiness as the market continues to adjust. Residential sales over $4 million pulled back by 29% from September 2022 levels overall, with single family home sales over $4 million falling 26% year-over-year. Meanwhile, one condominium sold over $4 million compared to two sales in the September. Overall, residential sales over $1 million were down 31% year-over-year in September.
Montréal
Sales activity renewed in Montreal’s luxury residential real estate market in the third quarter of 2023, despite growing discord between the expectations of prospective sellers and buyers. From July 1–August 31, $4 million-plus residential sales remained relatively stable with a marginal increase to nine transactions compared to eight in the previous summer, while sales over $1 million were up 31% year-over-year. September sales activity foreshadows a market that continues to tread a tenuous balance despite the widening divide between buyer and seller price expectations. Residential sales over $1 million held steady with a marginal 4% gain, while three properties sold over $4 million, compared to two transactions in September 2022.
Calgary
Calgary’s luxury market momentum outstripped that of other major Canadian cities in the third quarter of 2023, as the fortitude of the city’s economic performance, population gains, and consumer confidence lifted sales. Residential sales over $1 million soared over the summer months, as sales climbed 69% year-over-year in July 1– August 31, with $1 million-plus single family homes comprising 88% of these the transactions. One $4 million-plus property, a single family home, sold over the summer, on par with seasonal levels in 2022 and 2021. September luxury sales activity foreshadows an active and healthy market ahead. Between September 1–30, overall residential real estate sales over $1 million more than doubled with a 106% year-over-year gain. During this time, $1 million-plus single family home sales were up 105% year-over-year, while condominium sales over $1 million remained muted, with five units sold compared to seven sold last September.
This article was originally published in Sotheby’s International Realty’s Insight Art of Living blog in October 2023.
*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.
