Luxury home sales in the Greater Toronto Area (GTA) soar ahead of 2017 peak levels

Sales in the $2 million plus price point up almost 134 per cent year-to-date 2021, compared to the same period in 2017, while the $10 million price point increased 158 per cent!

Despite the somewhat erratic behaviour of the Greater Toronto Area (GTA) housing market in the third quarter of 2021, homebuying activity in the luxury segment did not disappoint. Close to 5,900 properties have changed hands over the $2 million price point in the GTA to date, an increase of 134 per cent over the same period in 2020. Even more impressive to note is that sales over $10 million have climbed 158 per cent, with 31 units moving between January and September – up from 12 one year earlier.

It’s hard not to make a comparison to 2017, the last time the luxury market was this strong. By the end of the third quarter of 2017, 2,925 homes had sold over the $2 million price point. In that particular instance, the market was trending down, in large part due to provincial government intervention and the introduction of the Fair Housing Plan in April of 2017. It has taken four years to reach full recovery, but recover the market has, with luxury sales more than doubling the number of sales reported between January and September of 2017.

Where do we go from here? Summer is in the rear-view mirror, the election has wrapped up, and inventory is beginning to bounce back in the GTA. Unfortunately, new listings are gobbled up within hours of launch throughout the 416 area code and into the 905. The upward pressure on housing values across the board, as a result, continues to be intense. Supply remains the greatest challenge within Toronto and the surrounding areas and new construction simply cannot keep pace with demand.

Market drivers remain constant. The pandemic-fueled housing spree that began in June of 2020 continues as buyers crystalize significant equity gains and take advantage of historically low interest rates to trade up to properties that offer greater space, better location, and more amenities. To illustrate, the average price of a detached home has risen 25 per cent in the first nine months of this year alone.

Condominiums are in vogue, yet again, as young professionals return to the core. Sales of condominium apartments and townhomes in the GTA are up approximately 70 per cent year-to-date, with sales over $2 million up an estimated 60 per cent. Empty nesters, reassured that their investment in condominium living makes sense, are also selling larger homes throughout the GTA for smaller downtown condominium apartments and townhomes, typically within walking distance to shops, restaurants, and pathways.

Contributing to the exuberance is the enormous transfer of wealth currently underway. A 2016 CIBC report estimated that $750 billion will be inherited by baby boomers across Canada between 2016 and 2026. The increase in the value of assets– particularly real estate –over this period is having a substantial impact on Gen X and Millennials as parents and grandparents move to secure homeownership for future generations.

While immigration is slowly gaining traction, the number of new Canadians arriving annually is nowhere near levels posted in the past. Domestic money stepped up to the plate during the pandemic and remains a driving force in the country’s housing markets, but once Canadian borders truly open up, immigration will have a significant impact on Canada’s already heated housing markets.

As the year draws to a close, 2021 will prove to be a record year for luxury home sales in the Greater Toronto Area – surpassing 2017 levels by healthy margins. Strong economic fundamentals are expected to prop-up homebuying activity throughout the remainder of the year and well into 2022. If you are thinking of buying or selling a home in today’s complex market, timing and strategy has never been more important. Feel free to call us to discuss your needs, whether you are looking for a market evaluation or just some sound advice. Our door is always open.

All the best,

Barry