2020 Mid-Year Canadian Luxury Real Estate Market Report

Mid-Year 2020

Engel & Vรถlkers Americas Canadian Luxury Real Estate Market Report 1

Engel & Vรถlkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

Engel & Vรถlkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

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Engel & Vรถlkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

Engel & Vรถlkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

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Table of contents

Introduction

4

National Overview

6

Halifax

13

Montréal

19

Ottawa

25

Toronto

31

Vancouver

37

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Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

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Introduction

Engel & Völkers welcomes you to its Canadian Luxury Real Estate Market Report. This report amalgamates market data with intel from Engel & Völkers’ local market experts. The result is a residential property analysis covering markets in Halifax, Montréal, Ottawa, Toronto and Vancouver through April, May and June. Three price segments are discussed, including under $1 million, $1-4 million and over $4 million as listed in the Multiple Listing Service (MLS).

This report is a resource for those seeking the best of life’s different stages, from purchasing a starter home or rightsizing a property, to growing a luxury real estate portfolio. Expect expert insights on what’s happening inside Canada’s top real estate markets including notable trends, in-demand

neighbourhoods,

economic

factors

and

changing buyer preferences.

As COVID-19 impacts every sector on a global scale, this report dives into how the pandemic is affecting real estate through Q2 and forecasts what lies ahead for Q3.

“ Canadian markets are proving their resiliency. Amid stock market fluctuations since March, blue-chip real estate has shown to be a safe investment. ” Anthony Hitt President & CEO, Engel & Völkers Americas 4

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

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Engel & Völkers Increases Market Share Amidst Pandemic

Engel & Völkers is reporting an increase in its market share amidst the COVID-19 pandemic across several key

From January to June

Canadian markets. Its advisors quickly shifted toward the

2020 Engel & Völkers

brand’s suite of digital tools and technologies to safely

saw a 30% YoY increase

and efficiently provide service to clients. As a result, Engel

in closed sales volume.

& Völkers saw a 30 per cent year-over-year increase in closed sales volume and 28 per cent year-over-year increase in average sales price across Canada from January to June 2020.

This spring, Engel & Völkers Nova Scotia became the largest real estate brokerage in Atlantic Canada through its merger with Tradewinds Realty, a veteran player in the market since 1989. The number of advisors at the brokerage has more than doubled and provides leading real estate services to home buyers and sellers across Nova Scotia, targeting the expansive area from Halifax to Sheet Harbour, the Annapolis Valley, Lunenburg, St. Margaret’s Bay and Cape Breton. Engel & Völkers is highlighting Halifax as a market to watch, due to its position as a ‘perfect storm’ seller’s market.

“Canadian markets are proving their resiliency. Amid stock market fluctuations since March, blue-chip real estate has shown to be a safe investment,” said Anthony Hitt, president & CEO, Engel & Völkers Americas. “Demand in Halifax, Toronto, Vancouver, Montréal and Ottawa held through the pandemic, with certain properties selling quickly and with multiple offers. We're seeing how COVID-19 has shifted priorities for some as renewed interest in suburban and country properties has grown.

This is creating a buying opportunity in urban areas that

In June, Four Seasons selected Engel & Völkers Montréal

will likely last for a limited time. As we expected, 3D virtual

to represent its newest residential development with

tours continue to prove their value. This will be especially

Carbonleo, Four Seasons Private Residences Montréal, a

advantageous for those looking to migrate to Canada

set of 18 private residences that sit atop Four Seasons

once the borders reopen.”

Montréal. Located in the Golden Square Mile of downtown Montréal, owners will benefit from top-tier hotel amenities including direct access to Holt Renfrew Ogilvy and its iconic spa. Each unit ranges from $6.8-15 million, making it one of the most luxurious residences on the market in Québec.

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Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

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National Overview

Demand for luxury properties surges amidst pandemic as Canadian markets power through volatile COVID-19 market cycle.

Canada’s major metropolitan areas are defying doom and

At a national level, April was marked by generational lows.

gloom forecasts, showing market resiliency following a

Home sale activity fell by a record 56 per cent compared

significant pause due to COVID-19. Until lockdown began

to an already affected March.1 Year-over-year, national

across Canada in late March, Halifax, Ottawa, Montréal,

sales dropped by 57.6 per cent, the lowest April sales

Toronto and Vancouver reported 2020 as one of the

figure since 1984.2 The number of newly listed homes

busiest years on record.

across Canada declined by 55 per cent in April compared to March.3

As lockdowns went into effect in late March, the crisis forced buyers and sellers to quickly adjust to the new

Despite these declines, prices held in most markets

market environment. While many sellers held off on listing

through the pandemic. Even amidst lockdown, April saw

or took their properties off the market, many remained.

Ottawa and Montréal record the largest year-over-year price increases, with Ottawa’s increasing by 10.5 per cent

In British Columbia, Nova Scotia and Ontario, real estate

and Montréal’s increasing by 8.4 per cent.4

was deemed an essential service allowing transactions to occur under significant restrictions. Québec, on the other

Showings through 3D virtual tours and video conferencing

hand, put the market on an unprecedented pause,

became the norm as buyer demand outpaced market

shutting it down from the end of March through May 11.

supply, leading to multiple offer situations in all markets participating in this report. In fact, Engel & Völkers shops in Ottawa, Montréal and Halifax are reporting a noticeable uptick in transactions and stories of domestic and

Even amidst the pandemic, June saw Ottawa’s YoY home prices increase

international buyers purchasing properties sight unseen.

16%

When borders reopen, Engel & Völkers is forecasting an influx of interest from the U.S., Hong Kong and Europe.

National

home

sales in May 2020

record 56.9 per cent, constituting of the

activity

lost

between

rebounded by a

one-third of a return February and April. By

June, price gains returned to pre-pandemic levels.

1

Canadian Real Estate Association, May 2020

2

Canadian Real Estate Association, May 2020

Inventory increased, but not enough to meet pent-up

3

Canadian Real Estate Association, May 2020

buyer demand.

4

Canadian Real Estate Association, May 2020

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Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

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Bank of Canada Cuts Key Interest Rate To soften the financial blow of COVID-19, the Bank of Canada cut its key interest rate to 0.25 per cent on March 18. It took steps toward quantitative easing on March 20, similar to the programs applied by the U.S. Federal Reserve and other major central banks during the 2008-09 financial crisis.5 As March closed, the Bank of Canada announced a debt purchasing program focusing on areas across the yield curve. Its minimum purchase target of $5 billion per week aims to add liquidity across problem areas of the market.

The Bank of Canada held this historical low through June, a bright light for potential real estate buyers looking to lock in a fixed mortgage rate. While there is no indication of how long the Bank of Canada will keep this rate in place, there is a precedent that may serve as a predictor for what lies ahead. In 2010, after the 2008 - 2009 economic crisis, the Bank of Canada increased its benchmark rate twice. It quickly reverted both times, realizing the adjustments were made too soon. It made no increases until 2015.6 Canada Mortgage and Housing Corporation (CMHC), the largest insurer of residential mortgages in Canada, introduced strict new lending rules on July 1. The move is expected to affect some first-time home buyers. One major change includes raising the minimum credit score from 600 to 680, a move that may leave some first-time buyers on the sidelines. The measures will limit the gross debt service ratios on home buyer loans to 35 per cent

& Völkers Americas Canadian Luxury Estate Market Report Mid-Year 2020 7This dataEngel represents totals and averages from AprilReal - June 2020

5

The Globe and Mail, March 27, 2020

6

Edmonton Journal, June 5, 2020

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

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per cent, from 39 per cent and will limit the total debt

strongly skewing toward young and part-time workers.

service ratio to 42 per cent from 45 per cent. Canada’s

The impact of these presumed temporary job losses is

two private sector providers of mortgage default insurance

less likely to affect the real estate buyer’s market, as this

announced they will not follow CMHC’s lead in tightening

group is often made up of renters. At the same time,

the qualifying criteria for applicants, certainly reassuring

professionals who continued to stay employed have likely

news for less qualified buyers.

increased their savings, possibly contributing to a stronger housing market.

Optimism on the Rise Blue-Chip Real Estate is Proving to be a In early June, the Angus Reid Institute reported 32 per

Stable Investment

cent (or approximately one in three Canadians) stated they are financially worse off now than at the same time last year, a number surprisingly comparable to previous non-pandemic period polling years.7 The percentage of those feeling better off now than the previous year has climbed from 21 per cent to 30 per cent.

Following the economic shock to the global stock market due to COVID-19, blue-chip real estate is proving to be a safe, low-risk investment. Blue-chip properties are defined by

property

concentrated

type in

and

areas

location, with

especially

strong,

ongoing

those and

broad-based demand. Canada’s major markets are COVID-19’s economic impact on Canadians has been

proving themselves through sustained property value

mixed. Some are better positioned to meet financial

growth, powering through market cycles in a stable and

commitments, while others are experiencing minor to

sustainable way, thus reinforcing their blue-chip status.

severe difficulty. A Statistics Canada survey found while close to 30 per cent of respondents said the pandemic is affecting their ability to meet financial obligations, almost 50 per cent reported only minor impacts or none at all.8 This indicates the financial impacts were less than expected and could result in better financial security for

Price points in the higher end are holding steady, with some listings moving faster than usual due to buyers looking to level up into larger properties as staying home becomes the norm. This is presenting owners of unique homes who want to sell in the next few years a potentially short window to do so now. Within a global context,

some.

Canada is still largely undervalued, presenting international While there was a high concentration of layoffs in some

buyers an intriguing opportunity to purchase prime real

segments, these were mostly concentrated in industries

estate.

7

Angus Reid Institute, June 4, 2020

8

Statistics Canada, Canadian Perspectives Survey Series 1: Impacts of COVID-19 on job security and personal finances, April 20, 2020

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Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

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The return of the suburban

There is less demand for condos, creating a buying

and rural buyer is likely here

opportunity for investors who are scouting for blue-chip

to stay as the great social

properties in Canada’s major metropolitan areas.

experiment of working from

MLS data is pointing to market conditions favouring sellers

home en masse proves to

across Halifax, Montréal, Ottawa, Toronto and Vancouver.

be successful.

For example, Vancouver’s average days on market has steadily decreased, while the total number of listings held steady in comparison to January, February and March. If sellers continue to hold off on listing their homes, a continued supply shortage is inevitable as provinces reopen. If this trend continues, Canada’s real estate market is well-positioned for price growth in the third and fourth quarters of 2020.

Uptick in Interest in Cottage Country COVID-19 is ushering in a new interest in suburban and Growing global interest in Canada, especially amid the

cottage country properties. Motivated by a desire for open

pandemic, is positioning Halifax, Ottawa, Montréal,

space, recreation and the switch to working from home,

Toronto and Vancouver for continued year-over-year

buyers are interested in second properties or making a

growth. Engel & Völkers expects pent-up buyer demand

permanent move to the suburbs or cottage country.

when the borders reopen in light of the tenuous political and social conditions creating uncertainty in various international markets.

The return of the suburban and rural buyer is likely here to stay as the great social experiment of working from home proves to be successful. With major tech companies like Shopify and Twitter announcing permanent remote

Low Inventory Driving Up Prices

working options, Engel & Völkers expects to see more urban professionals, especially with young families looking

Engel & Völkers license partners are reporting an inventory

for more space, move to the countryside.

shortage with low supply in major metro areas across Canada. Multiple offer situations are a common scenario in all markets surveyed. Properties in high-demand price points are sold in a matter of days.

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Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

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In metropolitan areas, the pandemic has increased the appeal and prioritization of home office spaces, as well as functional outdoor spaces like terraces and backyard pools. Engel & Völkers is reporting increased interest in luxury properties that check all the boxes in terms of home design, living space and lot size.

This shift to the suburbs and countryside is creating a buying opportunity for the savvy urban market investor looking toward the long-term, especially in the condo market. Engel & Völkers is forecasting the window of opportunity will be temporary. Increased interest in cities are expected to return as COVID-19 outbreaks come to an end.

Virtual Real Estate is Here to Stay Engel & Völkers is reporting the virtual element is here to stay. 3D virtual tours have proven their value for vetting properties and selecting the must-sees, complementing static listing images as the main source for understanding layout, scope, and intricate details.

With social distancing measures applied mid-March, the real estate industry quickly pivoted to continue servicing buyers and sellers using 3D virtual tours and video conferencing.

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Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

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Engel & Völkers Toronto Central presented a home in The Beaches neighbourhood listed for $1.3 million through a virtual

showing.

The

presentation

was

narrated,

highlighting features and immersive details comparable to an in-person showing. The home sold within 12 days.

Over a two-day period, Engel & Völkers Tremblant sold $36 million in pre-construction condos using Google Meet, allowing buyers to consult with a real estate advisor and invest from the comfort of their home.

Over a two-day period, Engel & Völkers Tremblant sold $36 million in pre-construction condos using Google Meet.

Millennials are Boosting Population in Canadian Metropolitan Areas For the millennial generation, turning 40 is on the horizon.

This growing buyer segment is making a serious shift toward long term investing in property, saving for retirement, and positioning their lives for a fulfilling future.

Engel & Völkers expects this cohort to continue to drive population growth in Canadian metropolitan areas due to international and interprovincial migration, as well as reaching their prime child-rearing years.

Data from Statistics Canada shows millennials are boosting the population in major urban areas and driving growth in emerging urban centres. This group is entering

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Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

This data represents totals and averages from April - June 2020

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

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prime working and spending years. While many have yet to purchase their first home or start a family, others are established and are now upsizing after benefiting from strong growth in the condo market during recent years.

Over the past four years, the population growth rate of millennials accelerated from 0.4 per cent to a record 2.5 per cent in 2018/2019. The Canadian cities experiencing above average growth in the millennial segment include Abbotsford-Mission, British Columbia (+4.0 per cent), London, Ontario (+3.7 per cent), Toronto, Ontario (+3.7 per cent) and Halifax, Nova Scotia (+3.6 per cent).9 This data matches what Engel & Völkers Nova Scotia is reporting anecdotally. Halifax is seeing ‘peak millennials’ (those at the top end of the age cohort) migrate to its market from other big cities in Canada. In recent years, Halifax Mayor Mike Savage has been scouting for tech and creative talent in other Canadian metropolitan areas in an effort to drive economic growth. As a result, there has been a dramatic increase in 25-39 year olds who have made Halifax their home due to its value proposition, including affordable housing, a relaxed lifestyle, a vibrant arts community and a growing startup ecosystem.

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Statistics Canada, February 2020

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Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

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Halifax

Low interest rates, domestic and international demand and oceanfront views are creating a ‘perfect storm’ seller’s market.

Market Overview Halifax’s low inventory, coupled with its position as a

were being listed again by mid-month. Despite home

destination for entrepreneurial millennials and international

sales decreasing by 47.3 per cent year-over-year and

buyers has positioned it as an up-and-coming Canadian

residential listings dropping 42.1 per cent year-over-year,

“market to watch.”

prices did not.12 Short supply combined with buyer

The year began with an active first quarter compared to last year. Fewer days on market, multiple offer situations and price increases were typical conditions in the first and second quarters, even amidst the COVID-19 pandemic.

Halifax closed the second quarter holding its position as a strong seller’s market with sustained buyer demand from

demand contributed to a sharp 9.3 per cent price increase in May 2020. The average residential home price reached $359,958.13 A popular area with homes priced under $1 million dollars is the North End, a bustling, vibrant community with an entrepreneurial spirit attracting locals and newcomers.

locals within the province. June reported a significant

Supply

increase of 10.4 per cent in home sales compared to last

pandemic, even as lockdown restrictions eased. Engel &

year, setting a new sales record for the province.10

Völkers data shows within the price segment $1 million

Halifax’s spring season started off strong with active buyers and sellers. However, as COVID-19 restrictions set in, mid-April experienced an abrupt stop in new inventory that

sustained

for

three

weeks.

Within

the

Halifax-Dartmouth region, April showed a 47.2 per cent drop in home sales year-over-year.11

remained

consistently

low

throughout

the

and below, active listings of condominiums increased from 153 in April to 156 in June. For detached single-family houses priced below $1 million, active listings increased from 1,121 in April to 1,304 in June. The market saw an uptick in new listings matched by high absorption rates.

Housing inventory remained relatively low compared to last year, especially in the core Halifax peninsula. This

As COVID-19 stretched into May and consumers became

trend continued through the end of Q2, seeing the sales

accustomed to changes in market conditions, properties

to listings ratio get even tighter due to increased demand, from 98.77 per cent in April to 100.57 per cent in June.

10

Nova Scotia Association of Realtors, June 2020

11

Nova Scotia Association of Realtors, April 2020

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Nova Scotia Association of Realtors, May 2020

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Nova Scotia Association of Realtors, May 2020

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Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

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115 Gill Cove Road Engel & Vรถlkers Nova Scotia

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Engel & Vรถlkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

Engel & Vรถlkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

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An In-Depth Look The quarter started off strong, with COVID-19 showing

evaporates. Halifax home sales in June increased 9.9 per

little impact on Halifax’s real estate market until the

cent year-over-year and 10.4 per cent across Nova

beginning of Q2. In April, active residential listings declined

Scotia, setting a new provincial record.15 Residential

by 32.2 per cent compared to last year, compounding

average prices in Halifax increased further in June

Nova Scotia’s short supply.

reaching $366,243 with price gains of 13.3 per cent

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year-over-year as conditions continued to tighten.16 Although buyers continued to shop and new inventory was successfully sold, the significant decrease in the

People who remained employed accumulated more cash

number of listings in April, compared to last year, led to an

flow due to staying home. This, coupled with low interest

overall reduction in sales activity.

rates, saw a trend toward buying properties with more space outside of the city core or recreation properties for

June marked the beginning of what is typically the busy

summer leisure.

spring season that was pushed to the summer due to COVID-19. Home sales experienced a significant rebound

Engel & Völkers reports that in Halifax in May 2020, while

compared to early Q2. Inventory continues to sell as

five properties sold priced between $1-4 million, 452

quickly as it is being listed. Properties that were previously

properties sold for under $1 million that same month.

sitting inside the urban core have now sold as inventory

This data represents totals and averages from April - June 2020

14

Nova Scotia Association of Realtors, April 2020

15

Nova Scotia Association of Realtors, June 2020

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Nova Scotia Association of Realtors, June 2020

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Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

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In Halifax, homes ranging from $1-2 million make up the majority of the high-end market, and inventory in this segment is quickly being purchased by locals, retirees and young

families

from

within

Canada

and

abroad.

International interest is also increasing and an influx of immigrants is contributing to growth in Halifax. The majority of international buyers are coming from the United States, Germany, Belgium, Britain and Switzerland.

The five Engel & Völkers shops in Nova Scotia as of June 30, 2020 make up 12 per cent market share of the total sold and active listings within the province. During COVID-19, the brokerage closed 61 per cent of its 2020 transactions from March to June resulting in 103 closed deals.

Homes over $4 million are located inside and outside Halifax Regional Municipality (HRM) at locations like North

Multiple offer situations are common within the HRM, with

West Arm, Portuguese Cove, and in places like Fox

the average property receiving as many as six offers. In

Harbour and Cabot Links, two of Nova Scotia’s top golf

high demand areas like downtown Halifax, an average of

resorts. The South Shore is also a historically affluent area

three to eight offers per listing are presented before a

and year-round destination that includes the UNESCO

contract is signed. The uptick in multiple offers is

World Heritage Site of Old Town Lunenburg, Chester,

attributed to lower interest rates, increased domestic

Peggy’s Cove, and St. Margarets Bay. Properties in the $1

demand and a supply shortage due to historically low

million plus segment are located at the South End and

inventory. Currently, buying on the Halifax peninsula is

Northwest Arm in the HRM, and oceanfront areas

becoming more challenging as demand continues to grow

between Halifax and the South Shore.

and inventory levels shrink.

“ The lowered Interest rates from COVID-19 have boosted purchasing power among buyers. This, combined with historically low inventory in both the new construction and resale markets, is contributing to the uptick in the multiple offers situations our shop is seeing. In regards to sellers, I believe our province’s response to the pandemic and our group effort in moving past the curve ultimately led to more people listing their properties — and many are selling fast with multiple offers. ” Donna Harding, License Partner, Engel & Völkers Nova Scotia

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Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

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Nova Scotia has a unique geography, where its suburban and rural areas can be as little as a 30 - 60 minute drive from downtown Halifax. Buyers looking to purchase in the HRM have more flexibility in choosing locations, and there is rising demand in areas bordering Halifax.

There has been an influx of millennials buying real estate and settling in Halifax in recent years. The city has invested in redevelopment and focused on creating employment and educational opportunities specifically targeting jobs for young people. Additionally, industry and government incentives are attracting a large number of tech workers and startups. This entrepreneurial influx is spilling into other areas of the marketplace.

This data represents totals and averages from April - June 2020

Local breweries now number 20 times the amount compared to a decade ago, and cannabis growers are purchasing farmland and setting up shop. The province’s low unemployment rate and high immigration rate are making it a destination for those seeking opportunities.

By June, Halifax’s YoY home prices had increased

13.3%

HRM includes Dartmouth, known as the City of Lakes, and Halifax/Dartmouth. All of HRM is now known as a four season destination, gaining traction as the next best place to live in Canada.

Engel & Völkers Nova Scotia is forecasting this trend will continue into Q3 as the expected pent-up buyer demand and low interest rates reinforce Halifax’s position as a seller’s market. It predicts its usually robust spring market

Q3 Outlook

will move into summer and then continue into the fall.

Although Halifax’s growth at the beginning of Q2 softened

With the 15-year low inventory levels expected to

in response to the COVID-19 lockdown, gains continued

continue, current pressure on prices are not forecasted to

through end of Q2 setting records for both new sales units

ease. Even as prices increase, Halifax is a relatively

and total dollar volume in June 2020.

affordable market when compared to other Canadian metro areas, and it expects to see an influx of interest, both nationally and internationally once borders reopen.

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Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

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This data represents totals and averages from April - June 2020

For investors, Halifax’s vacancy rate is one per cent, making it a prime location for growth and viability. The ROY and The Residences at Queen’s Marque are two new luxury developments coming soon which are expected to be hot commodities in the high-end segment.

Prices are likely to grow at a steady pace year-over-year as more people make a permanent move to the province.

As multiple offers remain common and buyer demand stays high, the outlook is extremely positive for Halifax.

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Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

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Montréal

Montréal’s high-end segment sees multiple offer situations and buyers say “hello” to the countryside.

Market Overview Montréal’s complete real estate stoppage from mid-March

After a historically low April and stabilization in May, June

to May 11 is proving to be more of a pause rather than a

brought a flood of buyers returning to the market after

tipping point toward a downward market. The end of Q2

lockdown restrictions lifted.

is seeing Montréal hold its position as a seller’s market as prices climb and new listings hit the market. Pent-up buyer demand and persistently tight housing supply are helping the market rebound at a steady pace.

Buyers are seeking properties that fit a ‘stay at home’ lifestyle and the luxury market is benefiting from this spike in activity. There is a noticeable pivot away from properties over $5 million as affluent buyers are defining luxury

Montréal began 2020 on an upward trend, seeing prices

differently. The age of excess is marked for departure and

sharply rise across all property types in the first quarter. At

a new generation of homeowners is ushering in

the close of March, Montréal celebrated the 23rd

understated opulence. Simply put, extravagance for its

consecutive quarterly increase in sales. Transactions

own sake is outdated. This reprioritization of the property

through Q1 surpassed a two-decade record, totalling

wish list began before COVID-19 and accelerated during

14,662 sales, with a 13 per cent increase year-over-year,

the pandemic as more buyers realized their true needs

the best sales result since 2000. At the same time,

and desires.

lockdowns due to COVID-19 had already begun, and real estate was deemed non-essential by mid-March. It returned after nearly two months, coming back on May 11. Montréal sprung into May, with sales and listing inventory discernibly improving with prices continuing to rise, reaching a new all-time high in June.

Engel & Völkers is noticing a new luxury buyer concerned with prioritizing lifestyle inside a smaller footprint resulting in the least possible impact on the environment. Many are investing in recreational properties and hobby farms, wanting to be closer to nature where they can enjoy open spaces with uninterrupted views.

The market continued to rebound from COVID-19 impacts with home sales increasing 16 per cent year-over-year by the close of June.17

Overall, Montréal real estate price points remained stable throughout the pandemic and effortlessly rebounded as Québec eased its restrictions.

17

Québec Professional Association of Real Estate Brokers, June 2020

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Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

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353-363 St-Paul E Engel & Völkers Montréal

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Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

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An In-Depth Look Demand for properties in Montréal’s high-end and

For homes priced $1-2 million, Southwest, Le Plateau,

recreational markets is escalating as people seek out

and Mile Ex/Park Extension are the go-to neighbourhoods

larger living spaces amidst the pandemic.

for home buying. These areas are sought after for their thriving arts community, restaurants, bars and vibrancy.

The top three areas for properties above $4 million are Westmount, Town of Mount Royal and Outremont. An influx of affluent French-Canadians is making Outremont a

Montréal’s tech ecosystem continues to grow and it is known as a world leader in the AI sector, positioning it as a strong investment market overall.

challenging neighbourhood to buy in as supply decreases.

In contrast, Westmount, a traditionally English-speaking

A strong first quarter helped cushion the impacts of

neighbourhood, is currently experiencing a buyer’s market

COVID-19. Despite Québec being the epicentre of the

with five times more listings than Outremont.

pandemic in Canada, March started off busy for real estate with a four per cent residential sales increase

International buyer demand for these areas remains high, historically accounting for 20 per cent of Montréal’s buyer pool. In general, buyers with a budget above $3 million will find a promising selection of luxury properties compared to other global cities where inventory is more scarce and

year-over-year.18 However, listings dropped 37 per cent compared to last year. This was due to many sellers staying on the sidelines during the COVID-19 emergency lockdown from mid-March to May 11, forcing a pause in new inventory.

prices are strikingly higher.

This data represents totals and averages from April - June 2020

18

Québec Professional Association of Real Estate Brokers, March 2020

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Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

21

Leading into April, sales dropped expectedly by a historic 68 per cent compared to last year. Interestingly, prices continued to rise with the median price of condominiums jumping by 12 per cent, plexes rising 10 per cent and single-family homes by 9 per cent.19 May was a rebound month and concluded with a less significant drop in sales at 41 per cent compared to last year.20 Listings fell by a mild 21 per cent compared to April, suggesting sellers were returning.21

In June 2020, YoY condominium prices increased

17%

This data represents totals and averages from April - June 2020

Rebound continued through June as both home sales and median prices increased, while supply remained scarce for the 57th consecutive month. This tight buying pool is positioning Montréal as a firm seller’s market with numerous multiple offer situations. New listings grew by 38 per cent year-over-year, but were offset by the substantial 16 per cent increase in home sales in June.

Median prices across all housing types reached record numbers with single-family homes and plexes at $395,000 and

$604,000,

respectively,

up

12

per

cent

year-over-year. Condominiums’ median price jumped 17 per cent to $305,000 year-over-year.22 This data represents totals and averages from April - June 2020

19

Québec Professional Association of Real Estate Brokers, April 2020

20

Québec Professional Association of Real Estate Brokers, May 2020

21

Québec Professional Association of Real Estate Brokers, May 2020

22

Québec Professional Association of Real Estate Brokers, June 2020

22

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

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With limited inventory in Montréal, prices are expected to keep climbing due to sustained buyer demand. The

Engel & Völkers Montréal reported 13

market is seeing multiple offer situations with a majority of

per cent of its closed deals

properties selling over asking price. Meanwhile, Bank of

year-to-date in 2020 were priced

Canada regulations have had a small, limited impact on

above $1 million with an average sold

Montréal as the city saw a rise in new private lenders,

price of $1.6 million. Since the start of

providing more financial options for buyers. Lower interest

COVID-19, the shop added 252 new

rates

listings to the market and in the last

due

confidence,

to

COVID-19

especially

for

also

boosted

first-time

consumer

home

buyers.

Although figures indicate Québec’s April unemployment

three weeks of June alone, $57 million in listing volume was added.

rate of 17 per cent was the highest since 1976 , 23

pre-COVID it was the lowest in 40 years. Engel & Völkers Montréal sees minor job loss influence on home sales and pricing as those affected are not large contributors to the

toward home renovation, with many people making

housing market’s overall activity, specifically within the

upgrades to outdoor spaces, creating home offices and

luxury segment.

optimizing the spaces they have.

Demand for more space is contributing to a rush to level-up and purchase larger homes. There is also a trend

“ We’re seeing multiple offers on luxury inventory that would usually sit on the market for a longer period. This is presenting a temporary selling opportunity for people who have unique properties and want to capitalize on their investment.

Market demand is strong in the city core, and we’re seeing new interest in the countryside, as well as the emergence of the hobby farmer. Many buyers want to get back to basics on big pieces of land and feel close to nature. They’re looking to grow vegetables and farm for pleasure rather than profit. That’s something new, and we’re seeing rising interest as a result of the pandemic. ” Patrice Groleau, License Partner, Engel & Völkers Montréal

23

“Labour Force Survey, April 2020.” The Daily , Statistics Canada, 5 June

2020, www150.statcan.gc.ca/n1/daily-quotidien/200508/dq200508a-eng.htm.

23

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

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The move toward a permanent work from home lifestyle coupled with the demand for waterfront summer homes is increasing demand for properties outside of the city’s

In June 2020, YoY prices of single-family homes and plexes increased

core. Rural inventory is feeling downward pressure as

12%

hobby farming is becoming a beloved pastime. This is leading to an upward shift in prices for small farms and country homes.

For those looking to sell, Engel & Völkers Montréal is advising now is the time to take advantage of these market conditions, especially if the home offers unique features. Current buyer psychology for prioritizing space

Q3 Outlook Existing low inventory coupled with pent-up demand from

and amenities, influenced by the pandemic, will not last forever.

domestic and international buyers is positioning Montréal

Summer will continue to be busy as current conditions

for a record-breaking Q3; this is pending borders and

pose a selling opportunity with homes moving quickly

universities reopen by September.

once listed due to pent-up demand. This will lead to a

Aside from being home to several prestigious Canadian universities, Montréal is known for its livability, green

slower fall season with most new listings expected to come on the market before the end of September.

energy sector and is the only North American city with a

Engel & Völkers Montréal has recently partnered with Four

major French-speaking population. Considering its strong

Seasons Montréal for the sale and marketing of the

quality of life and resources, Montréal will continue

prestigious Private Residences at the top of the Four

attracting people around the world as a safe market for

Seasons Hotel. The residences are priced between $6-15

real estate transactions.

million, marking record high prices for condos in Montréal.

If the same pace of immigrants who have historically

Hochelaga-Maisonneuve is a neighbourhood growing in

entered the city returns once borders reopen, Engel &

popularity for homes less than $1 million. It has

Völkers Montréal forecasts a considerable influx of

transformed from a once predominantly industrial area to

international buyers, and demand to explode, particularly

an up-and-coming borough known for its independent

in areas offering private English-speaking schools –

businesses, heritage buildings and green spaces. The

causing the market to narrow and prices to surge.

east side of Montréal is expected to boom as the west

Inventory is expected to continue to be low due to a

becomes saturated. Investors should keep an eye on new

shortage of land and growing desirability to permanently

developments in all areas of the city.

live in Montréal.

24

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

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Ottawa

June saw Ottawa’s year-over-year house prices rise by 15 per cent and condo prices rise by 17 per cent, boasting the largest price increases in Canada as predicted by Engel & Völkers in its Spring 2019 forecast.

Market Overview Ottawa strengthened its position as a seller's market,

Despite COVID-19, this market is holding its position as

maintaining its status as one of Canada’s fastest-growing

one of the most attractive for investment by virtue of its

real estate ecosystems. June saw year-over-year house

stability and healthy economic environment. Ottawa is

price gains of 15 per cent overall. The condo segment

uniquely positioned on the job front due to its high volume

increased by an unprecedented gain of 17 per cent

of direct employment in the public sector, tech, healthcare

year-over-year in June. Listings are priced at fair market

and

value and 56 per cent are being sold over asking.

Ottawa-Gatineau increased from less than five per cent in

24

Overall,

June

inventory

was

52

per

cent

lower

year-over-year. Even as new inventory hit the market, prices continued to climb. Low inventory and high buyer demand are particularly prominent for properties priced up to $1.5 million. As restrictions lifted, high-end properties that had been sitting for years began selling. Properties with pristine finishings, upscale kitchens, wine cellars and inviting outdoor spaces are being sold over asking. Since

education.

The

unemployment

rate

in

early 2020 to just over seven per cent in May.26 This low unemployment rate amidst the pandemic is a key factor providing economic security in the area. Its healthy rental market, driven by academics, diplomats and politicos looking for leases in executive properties, offers a cash-flow opportunity for investors, despite the borders being closed. With two universities and several community colleges, students are a further segment propping up the rental market.

2018, the sales to active listings ratio has been under the number of active listings reducing

Through Q2, real estate quickly rebounded from the

year-over-year. The COVID-19 pandemic is further

impacts of COVID-19 as the market continued to favour

intensifying constraint on new inventory.

sellers with strong demand, low inventory and price

pressure with

increases, despite drops in home sales.

24

Ottawa Real Estate Board, June 2020

25

Ottawa Real Estate Board, June 2020

26

Statistics Canada, May 2020

25

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

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608 Byron Avenue Engel & Vรถlkers Ottawa Central

26

Engel & Vรถlkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

Engel & Vรถlkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

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An In-Depth Look The most in-demand luxury destination for properties over

Engel & Völkers Ottawa Central reports regular multiple

$4 million continues to be Rockcliffe Park, only seven

offer situations. Prior to COVID-19, it was common for

minutes from Parliament Hill, home to Canada’s federal

quality inventory to receive up to 18 offers. As buyers

government. New construction is increasingly common in

became accustomed to virtual showings, properties

this area as it sees purchasers build new custom

continued receiving eight to 10 offers on average

mega-properties on the land. For homes priced over $1

throughout the lockdown. Multiple offer situations grew in

million, the prime luxury neighbourhoods are in The Glebe,

June with listings sold over asking increasing from 43 per

and the west end, including Westboro and McKellar Park.

cent in May to 56 per cent.

Stittsville remains the prime neighbourhood for new

In April, the pandemic’s impact triggered a year-over-year

homes under $1 million with several new housing

decrease in residential home sales by 55 per cent.27

developments. In addition, Mechanicsville, Hintonburg and

Mid-May saw a stark improvement from April. Monthly unit

Wellington West are popular with a stylish selection of new

sales ticked up 11 per cent from April’s figures, but were

infill inventory appealing to a variety of buyers who are

down by 44 per cent compared to last year. At the close

drawn to neighbourhoods with strong walkability scores

of May, residential property sales decreased by 43 per

and a collected selection of shops and restaurants.

cent year-over-year, but average prices for residential units rose by 13.8 per cent compared to last year.28

This data represents totals and averages from April - June 2020

27

Ottawa Real Estate Board, April 2020

28

Ottawa Real Estate Board, May 2020

27

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

27

From August 2019 to February 2020, home prices

property sales in the $3 million plus category peak at

increased at an annual rate of 31.8 per cent, tripling the

three to five transactions per year.

amount compared to six months prior.29

Surprisingly, deals closed on four luxury homes above $3

June saw recovery back to normal levels with a mild two

million before the end of May, boosting confidence in the

per cent drop in unit sales year-over-year, a drastic

affluent market. From January to June 2020, 12 total sales

improvement from the 55 per cent drop in April and 44

closed above $2 million, a 33 per cent increase during the

per cent drop in May. Residential homes sales in June

same time period the year before when nine sales closed

rose one per cent year-over-year while condominiums

above $2 million. The market also saw more international

sales decreased by 12 per cent year-over-year. Average

interest within the luxury segment where locals are usually

sale prices increased in June as condominiums were up

the predominant buyers.

17 per cent and residential-class properties increased by 15 per cent compared to last year despite the reduced number of sales.30

Engel & Völkers Ottawa Central is seeing an emerging trend of buyers seeking properties in the suburbs, such as Greely and Manotick with social distancing measures shifting consumer preferences in favour of greater land and space. These larger properties offer an attractive

In June, listings sold over asking increased to

56%

lifestyle particularly as future travel may be restricted.

High-end inventory that was sitting prior to COVID-19 is now selling in locales such as Rideau Forest. More buyers are also looking to purchase secondary homes and

Unit sales decreased most for homes priced below

recreational properties for leisure in lieu of travelling

$650,000 and condos below $350,000. The category still

abroad. Housing in Ottawa’s core neighbourhoods is

moved inventory through Q2, albeit at a slower pace,

becoming unattainable due to popularity and high prices,

reflecting its reduced inventory levels. The luxury segment

pushing buyers to look to areas around the city’s

above $1 million was the least affected, seeing price

downtown core. This demand surge as a result of

increases and buyer competition around the offer table.

COVID-19 poses an advantageous selling opportunity for

For properties under $1 million, homes sat for less than 60

people to cash out and invest in diversifying their real

days while it took less than 90 days for a mid-priced home

estate portfolios or leveling up their existing homes

between $1-1.5 million to sell. Typically, high-end

through renovations.

29

“Housing Affordability in Ottawa Has Deteriorated 'Markedly'.” Greater Ottawa

Home Builders Association, 5 May 2020, www.gohba.ca/housing-affordability/.

30

Ottawa Real Estate Board, June 2020

28

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

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For luxury properties, millennials have emerged as a major buyer group. Peak millennials are prioritizing their

Engel & Völkers Ottawa Central

spending on housing. This cohort is defining luxury

reported a June increase of 40 per

differently than their parents’ generation. They are

cent in closed sales volume

foregoing larger properties and are making smarter use of

year-to-date and 45 per cent in

smaller spaces filled with high-end amenities and

average sold price. Fourteen deals

furnishings. The market has seen many moves to the

over $1 million were closed at the

city’s west end where new developments are emerging.

end of June 2020.

A popular home buyer group is young professionals living in Ottawa occupying positions at major tech companies and startups.

With savings accumulated for people who remained

This is helping to drive a consistent flow of renters into the

employed during COVID-19, Engel & Völkers Ottawa

core. As part of the city’s prime job market, this will

Central believes more buyers may look into purchasing

continue to be a main driver for the rental property

rental property as a second source of income. The strong

segment. Overall, the market will continue its momentum

rental market is largely driven by two universities and

as a growing place for stable investment in real estate.

community colleges with large student populations, foreign delegates and politicos who require housing while posted and working in Ottawa.

“ The category that has been influenced most by COVID-19 is home unit sales under $650,000. This is where you see significant changes in the number of units that have exchanged hands in the residential section. For properties between $350,000 up to $1 million, you still see price increases and a lot of buyer competition. ” Nancy O’Dea, Private Office Advisor, Engel & Völkers Ottawa Central

29

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

29

Q3 Outlook Moving forward, Ottawa will continue to see the pent-up demand that has persisted over the past year due to the market’s lack of inventory. Recovery from COVID-19 has already begun as seen with the rebound in May and June home sales with price inclines across all properties, and the city remains a stable market to invest in due to its steady economic flow. The usually busy spring market has shifted to the summer with heated market conditions and growing international interest in luxury neighbourhoods like Rockcliffe Park.

Up-and-coming places to watch include Ottawa South, Alta Vista, and Almonte. Particularly, Almonte is a growing destination for first-time buyers and retirees who are attracted

to

several

new

and

affordable

This data represents totals and averages from April - June 2020

housing

developments, as well as the charm of the village with its boutique shops, arts and food scene.

As a capital and government city, Ottawa stands out within major metropolitan areas for its resiliency. As the seat of Canada’s federal government, pandemic-related

Compared to May 2019, average prices for residential units in May 2020 increased

13.8%

job loss in Ottawa is not likely. Before COVID-19, job growth was at an all-time high, particularly for government and tech industries. This has insulated the local economy, placing it in a unique position among the major markets.31

31

“REIN Report: Canada's Major Housing Markets Are Slumping-Except One.” The Real Estate

Insider REIN Report Canada's Major Housing Markets Are Slumping Except One Comments, blog.reincanada.com/canadas-major-housing-markets-are-slumping-except-one/.

30

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

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Toronto

June boom: sales of homes and townhomes accelerate while condo slowdown presents a temporary buying opportunity in Toronto’s downtown core.

Market Overview The first quarter of 2020 showed busy activity until the onset of Ontario’s COVID-19 lockdown mid-March.

Despite a mid-Q2 pause, Toronto’s popularity among domestic and international migrants is keeping the market

In June 2020, YoY residential home benchmark prices were up

11.9%

on firm ground. Supply and demand fell in tandem and the market remained balanced. The halted spring season picked up in June, with inventory moving in most segments except the condo market.

Resales were up 49 per cent year-over-year during the first two weeks of March. As lockdown began, the season adjourned. Home sales plummeted 16 per cent in the latter half of the month.32 Engel & Völkers reports from March to April, total units sold for all homes priced $1-4 million fell from 616 in March to 251 in April.

balanced pace. At the close of the month, prices rose by three per cent year-over-year, indicating the market is regaining traction and moving toward normalcy.33 June’s arrival ushered in pent-up buyer demand, especially for detached and semi-detached homes. This, coupled with tight housing supply and growing consumer confidence post-COVID, is effectively positioning Toronto as a seller’s market. Residential home benchmark prices were up 11.9 per cent year-over year with the strongest

May brought the first glimmer of market recovery as

price growth in the detached and semi-detached

Toronto saw a pick-up in housing activity. Home sales

segments, up 14.3 per cent and 22 per cent respectively.

increased by 55.2 per cent and new listings jumped by

Average sales price was also up substantially by 7.8 per

47.5 per cent compared to the previous month. These

cent month-over-month, signalling a revival in the higher

activities kept the market moving at a well-distributed and

price-point segment in the Greater Toronto Area (GTA).34

32

Toronto Regional Real Estate Board, March 2020

33

Toronto Regional Real Estate Board, May 2020

34

Toronto Regional Real Estate Board, June 2020

31

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

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98 Valecrest Drive Engel & Vรถlkers Toronto Central

32

Engel & Vรถlkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

Engel & Vรถlkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

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An In-Depth Look Demand for high-end real estate is rising as buyers seek

April’s reduced activity caused a significant 67 per cent

out homes accommodating all daily activities. This move is

drop in home sales year-over-year, a generational low.35

opening a temporary window to purchase condo property The condo segment came to a standstill as most buildings

in North America’s fastest growing city.

prohibited showings throughout the lockdown. Decline in The most in-demand luxury locations for homes priced

condo activity within the GTA is expected to continue until

over $4 million remain Bridle Path, Forest Hill, and

COVID-19 restrictions ease. April condo sales in the GTA

Rosedale

and

saw a drastic 71.6 per cent decrease compared to last

Lawrence Park are favoured neighbourhoods for buyers

year, the biggest drop amongst all major home types.36

seeking luxury homes priced $2.5 million and over.

Nonetheless, the condo market will likely rebound at a

year-over-year.

Summerhill,

Yorkville,

brisk pace and return to its status as a luxury purchase for Data from January and February indicated a strong sales

first-time home buyers and investors.

outlook for Toronto, however, the effects of the pandemic trickled into the market mid-March and caused a sharp decline in April, mostly affecting downtown Toronto.

This data represents totals and averages from April - June 2020

35

Toronto Regional Real Estate Board, April 2020

36

Toronto Regional Real Estate Board, April 2020

37

Toronto Regional Real Estate Board, May 2020

33

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

33

Backed up by domestic buyers, Toronto proved resilient in

Millennials, the once dominant group of first-time home

June with consistent increases in market activities as the

buyers, are now leveling-up, purchasing houses in the

city entered more reopening phases. Home sales rose

$2-3 million range. Properties under $1 million are a hot

drastically from May by a sharp 89 per cent (on an actual

commodity for first-time buyers and for those looking to

basis) and benchmark prices for a residential home

move from a condo to a single family house.

increased by 8.2 per cent year-over-year.38 Pent-up demand persisted with homes selling quickly once on the market. This, coupled with low interest rates and an inventory shortage, drove up prices.

Toronto is seeing Gen Z buyers entering the market as they begin to use savings for their first real estate purchase. A surprising 81 per cent of Canada’s Gen Z cohort are optimistic about home ownership and

Engel & Völkers Toronto Central is reporting a rising trend

expressed interest in owning a home in the next 20 years.

of property searches in the suburbs and cottage country.

Only four per cent said they would never be interested,

In the Greater Toronto Area, demand for properties under

and 29 per cent reported a plan to purchase in the next

$1 million remained high, especially in places like

one to five years.40 Engel & Völkers Toronto Central

Hamilton, Burlington, Ajax, and Oshawa.

observes Gen Z buyers are prudent, with greater saving habits in comparison to the previous generation. They

Demand in cottage country sustained through the pandemic. For example, The Lakelands region, including Muskoka, is only reporting a 46.3 per cent decline in

care less about amenities and are willing to buy fixer-uppers, giving them an edge as viable first-time home buyers with purchasing power.

residential non-waterfront sales, and a 37.3 per cent decline in waterfront sales in April compared to last year.39

Toronto is holding its position as the fastest growing

The drops in activity were milder in comparison to

metropolitan area in Canada and the United States. Last

Toronto, where the market saw a 67 per cent drop in

year, the City of Toronto’s population increased by 45,742

home sales that same month. As lockdowns eased,

persons, exceeding the combined gains of the two fastest

activity spiked. In the Grey Highlands, a popular

growing central cities in the United States (Phoenix,

recreational market, the average sold price increased

Arizona and San Antonio, Texas).

by 39.2 per cent year-over-year in June. Prices in the Georgian Bluffs increased by 64 per cent year-over-year in

In contrast to New York City, Toronto had almost three times as much population growth from immigration. This

June.

spark in growth, global interest in immigration, and steadily increasing population is expected to boost home 38

Toronto Regional Real Estate Board, June 2020

39

The Lakelands Association of Realtors, April 2020

40

McKnight, Nicole, et al. “Generation Rent: How Many Canadians Think They'll Be

prices and drive new market activity in the GTA moving forward.41

Able to Buy a Home?” Finder CA, 11 May 2020, www.finder.com/ca/generation-rent.

34

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

34

Q3 Outlook Engel & Völkers Toronto Central and Engel & Völkers Toronto Central expects to see robust

Engel & Völkers Toronto Uptown

market activity through the summer. May’s pick-up and

closed 20 deals over $1 million with

June’s boom saw Toronto close the quarter with an all-

an average sales price of $2.1 million

time high average sale price of $930,869.

in June 2020 combined.

There is movement across all price points with no signs of slowing down. The outlook going forward is optimistic, as government

restrictions

ease

and

buyers

regain

confidence and comfortability with the current market.

The stagnant condo market is presenting a temporary buying opportunity for people interested in securing

In the post-COVID era, Engel & Völkers Toronto Central

property inside North America’s fastest growing city.

predicts sellers will gradually return to the market. A sudden surge in inventory is not expected and buyers will

Moving forward, housing in Toronto remains a hot

continue competing for a limited number of properties.

commodity with consistent movement in the under $1

Engel & Völkers is forecasting a group of buyers with

million segment. This has not changed since the start of

savings, due to low spending during the pandemic, could

COVID-19 and is expected to hold throughout 2020.

upsize their current homes, move to cottage country or purchase recreational property.

“ Unsurprisingly, homes under $1 million continue their momentum as a hot market and remain in high demand with short days on market. That is where the sweet spot is. In terms of inventory, homes between $1-2 million have more movement compared to those between $2-4 million, but interest in both segments is strong as demand for space and living amenities increases through the summer. People are spending their vacation budgets on buying bigger spaces or purchasing recreational homes.”

Anita Springate-Renaud, License Partner, Engel & Völkers Toronto Central

41

Ryerson University’s Centre for Urban Research and Land Development. Ryerson University, 2020, Toronto

Now Fastest Growing Metropolitan Area in the United States and Canada, City of Toronto Still Fastest Growing Central City, www.ryerson.ca/content/dam/cur/BLOG/Blog48/Population_Growth_US_Canada_2019_Print_Friendly.pdf.

Accessed 16 June 2020.

35

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

35

A highly anticipated mixed-use development to watch,

In terms of investment opportunities, buyers can look

located at the corner of Bay Street and Bloor Street, is

to Leslieville and King Street East near the Distillery

being spearheaded by acclaimed architecture firm Herzog

District for potential new developments. For buyers

& de Meuron. This is the firm’s first project in Toronto and

seeking properties under $1 million in Toronto, the top

it is teaming up with Quadrangle Architects to bring an

three up-and-coming neighbourhoods to watch are

urban 87-storey high-rise landmark to the heart of the

The Junction, East York and Mimico West.

affluent Yorkville neighbourhood.

This data represents totals and averages from April - June 2020

36

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

:

This data represents totals and averages from April - June 2020

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

36

Vancouver

Vancouver holds blue-chip status and forecasts an influx of international buyers post-COVID. Market Overview As Vancouver begins to see COVID-19 restrictions ease, it is holding its position as a balanced market, with

Vancouver is forecasting

conditions favouring sellers on certain properties. The

an uptick in interest

pandemic came following a difficult environment of

from buyers outside

increased

of Canada’s borders.

taxes

and

government

regulations

incrementally introduced since 2016. The taxes were designed to tame years of exponential growth. Despite this, Vancouver is maintaining buoyancy and proving the strength of its value proposition.

In tandem with the COVID-19 lockdown, the total number

In June, the market began to normalize as home sales

of home sales declined steadily in the latter two weeks of

and listing activity returned to stable levels. Residential

March and into April. However, considering the first two

home sales increased by 17.6 per cent year-over-year

weeks of March were the busiest of the year, signs

from 2,077 to 2,443, with a sharp increase of 64.5 per

pointed to market demand being paused rather than

cent from 1,485 sales in May 2020. Listings rose by 15.1

halted. From April to May, the sales to active listings ratio

per cent compared to May 2020, proving that sellers are

increased from 11.8 per cent to 15 per cent in May.

gaining confidence in the market, with more utilizing virtual

42

Listings began to increase and prices rose by 2.9 per cent

tactics for transactions amid social distancing measures.44

in May year-over-year, signalling a recovery.43

In June 2020, YoY residential home sales increased

17.6%

42

Real Estate Board of Greater Vancouver, May 2020

43

Real Estate Board of Greater Vancouver, May 2020

44

Real Estate Board of Greater Vancouver, June 2020

37

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

37

2901-120 W 2nd St Engel & Vรถlkers Vancouver

38

Engel & Vรถlkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

Engel & Vรถlkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

38

An In-Depth Look Through COVID-19, health and safety was the top priority

In the over $4 million segment, sales volume has

for people living in Vancouver. Lockdown measures

decelerated since 2016 on account of the foreign buyers

worked, and Vancouver’s exceptional performance during

tax and speculation and vacancy tax. In spite of this,

the pandemic made headlines globally. This success is

prices continue to hold as sellers in Vancouver know the

positioning it as a prime place to relocate for safety and

worth of their properties and are confident in the city’s

livability. It is anticipating international buyer interest once it

reputation as a global destination.

is safe for travel.

Vancouver is forecasting an uptick in interest from buyers Locally, the most in-demand luxury neighbourhoods in the

outside Canada’s borders. This is likely due to Vancouver

over $4 million segment are Shaughnessy, West Point

being one of the best performing cities in the world for

Grey, and West Vancouver, areas with globally rare

keeping COVID-19 in check. Dr. Bonnie Henry, the

properties. West Vancouver’s pristine waterfront offers

province's health officer, is proving to be one of the

breathtaking views, and high-end properties are quick to

world’s most competent doctors amidst the pandemic.

sell. North and East Vancouver are neighbourhoods with a decent supply of homes over $1 million. For buyers looking for homes priced between $1-4 million, Mount Pleasant West is the ideal spot.

Homes under $1 million are rarely found in Greater Vancouver, however, the outskirts are starting to gain popularity with prominent potentials. The top three up-and-coming areas include Delta, Langley, and Surrey, all supplying significant inventory.

: This data represents totals and averages from April - June 2020

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Ahead of the pandemic, the year started off strong for the Vancouver real estate market. February saw sturdy year-over-year increases, while total inventory lagged. The first

two

weeks

of

March

maintained

From May to June 2020 new home listings increased

February’s

57%

momentum before succumbing to the COVID-19 pause.

In June, buyers and sellers became more comfortable Despite the World Health Organization declaring the

with market conditions and virtual tools. Prices held while

pandemic on March 11, home prices still managed to

listings and home sales showed healthy increases

climb 0.5 per cent. Activity sharply slowed in mid-March,

month-over-month and year-over-year. In June, 5,787

and by month’s end, Vancouver was under lockdown.

homes were listed, a 21.8 per cent increase compared to

Real estate was named an essential service, allowing real

last year and a 57.1 per cent increase compared to May

estate advisors to carry out transactions under the new

2020. The benchmark price for all residential properties in

lockdown restrictions as the Vancouver market quickly

Metro Vancouver in June was $1,025,300, representing a

adapted by leveraging 3D tours and video conferencing.

3.5 per cent increase over June 2019 and a 0.3 per cent

45

In March and April, Vancouver residents adhered to

decrease compared to the previous month.48

government mandates and stayed home, resulting in a

As restrictions lifted, some looked for properties that

tapering off of new listings. Sales in April took the

better accommodated their lifestyle by upsizing inside the

strongest hit while COVID-19 was in full swing, decreasing

city limits or seeking properties in the suburbs. Others

by 39.4 per cent compared to the same time last year.46

stayed in their Vancouver condos while looking for second

Despite the drops in sales, prices generally held steady.

properties in local recreation markets.

The pandemic’s peak saw buyer activity outpacing

The permanent work from home scenario, coupled with

listings, suggesting sellers were staying mostly on the

reopening from lockdown, is creating an uptick in buyers

sidelines. By May, sellers began to emerge from isolation

seeking more space in suburban homes or second homes

as sales increased by 33.9 per cent and inventory

in cottage country.

increased by 5.7 per cent month-over-month.47

45

Statistics Canada, April 2020

46

Vancouver Regional Real Estate Board, April 2020

47

Vancouver Regional Real Estate Board, May 2020

48

Real Estate Board of Greater Vancouver, June 2020

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Vancouver is seeing a lack of new property inventory due to provincial regulations for developers. The current

Engel & Völkers Vancouver reported

requirement forces developers to sell 60 per cent within

36 per cent of closed transactions

nine months of the development in order to extend the

over $1 million and had eight

permit and receive construction financing. As a result,

closed deals over $4 million at an

Vancouver has faced a market downturn in new

average sales price of $5.5 million

development since 2017.

in June 2020. Year-over-year and year-to-date, the shop cited a 17 per cent closed volume increase in

Q3 Outlook

June 2020.

Engel & Völkers Vancouver is forecasting a return to stability and normalcy. Its performance during the pandemic is encouraging, holding its position in the Canadian marketplace. City council’s supply cut on new

will

housing could leave home buying in the city core out of

international contributor to Vancouver’s growth in the near

reach for some. As borders reopen, Vancouver will

future. Unrest in Hong Kong means 2020 could see some

continue to be a top destination for immigration with pent-

of the 300,000 Canadian passport holders, as well as an

up demand as a result of the pandemic. Interest from the

influx in asylum seekers, come to Canada following

United States is forecasted to climb post-COVID and

Beijing’s new national security legislation.

continue

into

2021,

becoming

a

significant

“ When Vancouver went into lockdown, people listened and stayed home. Word about British Columbia’s lockdown success is spreading and attracting wealthy shoppers who want to purchase property in a safe and secure location with an outstanding lifestyle. We’re forecasting an inflow of international buyers, mostly coming from the United States. ” Andrew Carros, License Partner, Engel & Völkers Vancouver

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Since COVID-19 put Q2 on pause, Q3 is expected to be

Investors looking for new opportunities in Vancouver

busy as it replaces the usually-active spring season.

should keep an eye on areas outside of Greater

Fall is forecasted to heat up with more listings and greater

Vancouver, including Delta, Langley, Surrey, White Rock,

consumer confidence, boosting supply and potentially

and Coquitlam where new developments and transit are

shifting to a buyer’s market. Overall, Vancouver is a safe

booming.

investment

individual builders are also good opportunities as there will

for

domestic

and

international

buyers,

cushioned by its high quality of life, good weather,

Boutique

townhouse

developments

from

be a lack of inventory for the next few years.

incredible access to nature and highly rated schools.

This data represents totals and averages from April - June 2020

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Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

This data represents totals and averages from April - June 2020

Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

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evrealestate.com ©2020 Engel & Völkers Canada, Inc. All Rights Reserved. Each brokerage independently is owned and operated. The information contained in this report, gathered

by Engel & Völkers Canada, Inc., references market data from MLS boards across Canada and commentary from its trusted license partners and advisors. Actual results may vary and we cannot represent that the content is accurate or complete. This market report is provided for general information only and not to be relied upon in any way. Engel & Völkers Canada, Inc. and its affiliates do not assume any responsibility or liability whatsoever for any loss or damage that may result from any use of, reliance upon, or reference to the information provided in this market report. This document is not an offering of a franchise, and where required by law, an offering can only be made 14 days after delivery of the applicable franchise disclosure document.

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Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020

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