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Year-End 2020

Engel & Völkers Canadian Luxury Real Estate Market Report 1

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

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

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

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

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Table of contents

Introduction

4

National Overview

6

Montréal

9

Ottawa

15

Toronto

21

Vancouver

27

Victoria

34

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

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

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Introduction

Engel & Völkers welcomes you to its annual year-end Canadian

Luxury

Real

Estate

Market

Report.

On-the-ground intel from local market experts combined with market data informs our analyses and serves as the basis for trends and forecasting. Homes priced from $1 to $4 million and $4 million-plus as listed in the Multiple Listing Service (MLS) were evaluated throughout the year with forecasts based on homes priced over $1 million. The result is a residential property and market report for Montréal, Ottawa,

Toronto

and

Vancouver

analysing

the

unprecedented year of 2020, with a keen focus on what we deem as a market to watch: Victoria.

“ From coast to coast, Canada experienced unprecedented levels of domestic home trading. With borders closed, the Canadian real estate market proved it’s built on solid fundamentals. As it relates to home value, there is no question both fiscally and in sentiment, it’s never been greater in the Canadian market. ” Anthony Hitt President & CEO, Engel & Völkers Americas 4

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

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

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Engel & Völkers Forecasts Homes Priced Above $1 Million Will Increase In Price By 7% In 2021.

2020, the Canadian economy

bounced

back

at

a

record-breaking 40.5 per cent pace, fueled by household spending. Previously, the record for quarterly growth in gross domestic product occurred in 1965, where the economy grew by 13.2 per cent in Q1.1 While Statistics Canada’s metrics only showcase the effects of a surge in domestic demand, if global COVID vaccination efforts are successful, we could see domestic

‘Home’ was the MVP of 2020

growth numbers matched by international demand. With immigration mostly on pause in 2020, there is currently a

Engel & Völkers forecasts luxury homes priced $1 million

backlog of people waiting to enter Canada.

or higher will see a year-over-year price increase of 15 per cent. The tendency towards all things home will outpace demand in 2020. All over the country, Canadians are evaluating their living situations and seeking out properties to fit their priorities now, without delay. Domestic demand,

Canada has announced

grouped with growing expatriate interest, historically high

the highest immigration

immigration targets and the possibility of university

targets in history for

students returning to school, will see high-end real estate outpace last year’s growth.

2021 - 2023.

Demand for Real Estate Will Climb as Canadians Transition to the Next Normal The Trudeau government announced Canada would If the COVID vaccine is successfully distributed, it’s expected Canada will likely see a return to some form of domestic normalcy. Once Canadians regain comfort and a feeling of safety, this will translate into a surge in demand for city life and activities surrounding travel, entertainment and hospitality. Upon resuming these activities, Canada’s

welcome 401,000 immigrants in 2021, another 411,000 in 2022, and 421,000 in 2023. These are the highest immigration targets in Canada’s history. Furthermore, if universities successfully open for in-person classes in September 2021, inclusive of international students, rental vacancy rates could drop to pre-pandemic levels.

metropolitan areas will see a resurgence to pre-pandemic levels of development.

Demand for Canadian real estate will surge as Canada transitions into the next normal. Pressure from domestic

Data from Statistics Canada already indicates positive activity that supports this forecast. In the third quarter of

migration, expatriate demand and the reopening of Canada’s

borders

will

see

2021

experience

a

post-pandemic boom. 1

5

Statistics Canada, December 2020

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2020 in Review The Spring Break No One Asked For

A record-breaking sale in

Historically, spring is the busiest season for home buying

Ottawa’s Rockcliffe Park closed at

$4.8M

and selling in Canada. Lockdown orders in March sent a freeze through the market, putting activity in Canada’s major metropolitan centres on pause. Open houses were

An Entrance of One’s Own

suspended and activity halted during what was typically known as a high season. As markets braced for the worst, stories emerged of virtual sales, some even site unseen. In May, Engel & Völkers reported selling $36 million of luxury pre-construction condos in Mont-Tremblant over the Google Meet platform. Overall, spring activity was not lost, only delayed. As the curve flattened, interest in real estate, notably luxury real estate, climbed. The year was characterized by record-high market activity in Canada’s metropolitan centres, suburbs and recreational markets from July - December.

Properties with private entrances won the race in 2020. The appeal of downtown condo living faded as cities locked down in spring. New living space requirements meeting pandemic-day needs created increased demand for standalone properties of all types. Homes or townhomes which would typically sit on the market for a more extended period were quick to sell in 2020. A home with its own private entrance and yard positioned it well within the market, even if nothing else about it appeared remarkable. In the standard market, homes faced stiff competition amongst buyers. In the high-end market,

Cottage Country Buzzed With Big City Energy

sales of expansive and unique homes boomed in urban and recreational markets. In Ottawa, one property in McKeller Park listed at $2.5

Real estate transactions in cottage country experienced an unprecedented boom, seeing laid-back markets

million sold $100,000 over asking price. In Rockcliffe Park, a record-breaking sale was made, closing at $4.8 million.

experience city-like market conditions and multiple offer situations. As lockdowns were announced, buyers quickly

In Vancouver, a $6.4 million Point Grey home sold within

searched for a place to wait out the pandemic. Many

one week in mid-December, a traditionally quiet time for

luxury buyers who regularly travel traded in their trips for

real estate. Victoria, British Columbia served as a leading

secluded recreational properties and good old-fashioned

example of how this demand translated into real-time

Canadiana. Some made permanent moves to the country,

market activity. In 2020, there were 114 transactions

realizing they can have it both ways and work remotely.

worth $295 million for waterfront homes, with 17

This trend was hot in 2020, but Engel & Völkers is

properties sold for over $4 million. Of those 17 properties,

forecasting that while some may stay in the country, many

Engel & Völkers helped broker

will return to metropolitan areas, drawn in by the desire of

comparison, the market had 85

the

sale of five. In

dining out, entertainment, museums and culture. 6

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

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waterfront sales worth $165 million with three sales of

This decrease in demand and low interest rates is

properties priced over $4 million in 2019, and this high

creating a temporary buying opportunity in Canada’s least

demand for waterfront homes will continue into 2021.

affordable cities. For interested buyers on the sidelines, now is the time to make purchases while borders are

Across Canada, demand for homes with high-concept design, excellent sightlines and quality finishes will continue into 2021. Engel & Völkers advises if you have a unique property with plenty of amenities, now is the time to sell and capitalize on your investment.

closed, competition is limited and it’s buyers’ choice. Once the borders reopen, the market will bounce back to pre-pandemic price growth and low inventory. In Toronto, December data shows while sales prices in the condo segment were down 6.7 per cent year-over-year, sales transactions were up a significant 75.9 per cent year-over-year. This indicates some are already taking advantage of temporary buyer’s market conditions.

Engel & Völkers advises if you have a unique property with plenty of amenities, now is the time

Major Source Of Housing Demand Absent The COVID pandemic has disrupted one of Canada’s most important drivers of housing demand: immigration.

to sell and capitalize on

Year-over-year, the number of new permanent residents

your investment.

fell by 63 per cent compared to July 2019. Canada’s immigrant intake plummeted in April due to travel restrictions, which remain in place. Some permanent resident applications continued to be approved, leading to year-over-year growth of only 0.5 per cent.2

Condo Markets Chilled in Canada’s Highest Priced Cities

Thus far, low inbound migration is most noticeably

The real estate market diverged this year. While single

metropolitan areas. If this lack of growth is sustained, the

family houses drove most interest, the appeal of living in

luxury housing market could feel the impact. For investors,

an urban condo lost its lustre for many. Toronto and

a long-term drop in rental demand could have serious

Vancouver experienced price drops among condos in the

repercussions. With the end of the pandemic in view,

tens of thousands.

downtown housing demand will return once vaccines are

impacting

the

condo

markets

in

Canada’s

major

widely distributed and borders are open. 2

7

Statistics Canada, December 2020

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Low-interest Rates Drove Market Activity On October 28, the Bank of Canada announced it would maintain its overnight lending rate of 0.25 per cent until 2023. The historically low rate was introduced on March 18, aligning with the first days of lockdown for many provinces. The Bank of Canada introduced quantitative easing on March 20, and debt purchasing would focus on problem areas across the yield curve. It maintained a minimum pace of $4 billion per week through 2020. Low interest rates will continue to drive market activity in 2021.

Plans for National Foreign Buyers Tax The Canadian government’s Fall Economic Statement included plans for a national foreign buyers tax. The goal of the tax is to make Canada’s housing market more

will take steps to mandate a national tax-based measure

Vacant-home Tax Alerts in Toronto and Vancouver

that will target non-residents passively storing their wealth

On December 16, the City of Toronto approved an

in Canadian housing. If implemented, the tax would level

implementation plan for introducing a tax on vacant

the playing field for the Vancouver and Toronto markets,

homes starting in 2022. The goal is to increase housing

which already have this tax in place. Often, buyers from

supply by encouraging owners to sell or rent unoccupied

the U.S. and Europe offset this tax with the value of their

units. Toronto estimates a tax rate of one per cent on the

currency and it is not a deterrent.

average Toronto home’s current assessed value could

affordable for domestic buyers. In 2021, the government

equal $55 million - $66 million in tax revenue per year. Tax revenue will fund new affordable housing. In Vancouver, the vacant homes tax will more than double next year, rising from 1.25 per cent to three per cent in 2021. The current rate applies to 2020 declarations, which are due by February 2, 2021. The City voted in favour of the increase on November 25.

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Montréal

Montréal earns status as most pandemic resilient metropolitan market. Engel & Völkers is projecting a price rise of 10.5% in 2021.

Home prices rise by 21% for all homes in Montréal Montréal's high-end market soared in 2020, despite contrary predictions. In the Québec region, year-over-year sales volume went up by 44 per cent, and prices for all homes went up by 11 per cent in 2020. Total listings were down by 44 per cent. In Montréal, year-over-year sales volume grew by 32 per cent, and prices rose by 21 per cent for all homes. Total listings were down by 16 per

Though the condo market saw an overall slowdown, prices grew year-over-year, but not as quickly as in years past. In October, new condo listings were up 72 per cent year-over-year, the most significant annual increase in 17 years. From January to December 2020, the cost of condos $4 million-plus rose in price by 9.09 per cent year-over-year. Condos ranging from $1 million to $4 million grew in price by 12.37 per cent from January to December.

cent. In the $4 million-plus category, move-in ready homes with contemporary design finishes sold within approximately one week, while homes requiring upgrades remained on the market for a longer period of time. In October, average days on market in this price segment hit a yearly low of 16 days. A record number of penthouses sold in 2020, including at the prestigious Four Seasons development for which Engel & Völkers is the exclusive global real estate ambassador. Prices in the $1 million to $4 million category hit a yearly

Buyers rush to the suburbs and cottage country, but for how long? Lack of travel and the rise of working from home is fueling extraordinary sales in Montréal’s cottage country and suburbs. In both areas, prices have soared while inventory has dwindled. The suburbs saw a growing impulse towards

single-family

and

detached

homes.

Year-over-year, total sales in the Greater Montréal area were up by 28 per cent. The longevity of this trend remains to be seen.

average high of $2,527,845 in June. Days on market steadily slowed from 117 days in June to 81 days in October, demonstrating strong demand from summer through fall. Despite the arrival of the second wave of

“ People have made long-term housing

COVID, residential sales jumped by 32 per cent compared

decisions based on a temporary situation. ”

to November of last year, setting a new record. This

Patrice Groleau, Engel & Völkers Montréal

demand continued into December. 9

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

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

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1440 Rue de la Montagne Engel & Völkers Montréal

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Engel & Völkers Montréal is predicting a boomerang effect

coupled with two historically high sales in the Town of

back to cities once they reopen. Many who made a move

Montréal made 2020 an unmatched year for high-end real

to cottage country or the suburbs will miss living in the

estate.

heart of the city and will be drawn back to the culture, entertainment and convenience aspects.

Market conditions for unique homes are strong, with exciting high-end properties on the market during the

Unprecedented levels of wealth in Montréal Engel & Völkers Montréal is reporting unprecedented

pandemic resulting from people wanting to cash-out. Montréal is an island and space is limited, and there are only so many luxury homes available. This makes Montréal a smart buy for blue-chip real estate.

wealth within its market. Back-to-back record sales

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

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Montréal rising to global city status “ The Québec government made a significant

Montréal earned the position as Canada’s most pandemic

misstep by not deeming real estate as an

resilient metropolitan market. Not only did it boast the

essential service. As a result, new listings were

largest year-over-year growth in prices for all homes, it

put on hold during lockdowns, which restricted supply in a market rife with demand. We

also had the second-best economic recovery after the pandemic’s first wave, behind Phoenix, Arizona.3 At a national level, Montréal has held its position in a global

estimate this decision contributed to 9 per cent

ranking of financial centre competitiveness while Toronto,

of the 21 per cent price increase seen in 2020, ”

Vancouver and Calgary dropped positions.4

Patrice Groleau, Engel & Völkers Montréal

The curve of urbanization is universal and Montréal is on track to level up and compete in price with Toronto and

3

Montréal International, September 1, 2020

4

Global Financial Centres Index (GFCI) by Z/Yen Group, September 2020.

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Vancouver. It is home to some of the world’s top-ranked universities, including McGill and Concordia. As a hub for creative and tech entrepreneurs, as well as a global AI capital, Montréal is one of the world’s most diverse and welcoming cities and will continue to attract domestic and international talent.

International buyer interest returning to the market While immigration is on pause, international buyer interest remains. Montréal is a top North American destination for the world’s more than 300 million French speakers. Interest is also coming from Dubai and Hong Kong. In Québec, 20 per cent of buyers are recent immigrants, meaning the buyer pool will grow once immigration

2021 Forecast

activities rev up.

Montréal holds its position as a seller’s market. Engel & Völkers is predicting market prices will increase by 10.5 per cent in 2021, climbing at a slower rate. Montréal is the Buyers should be aware of the rising costs of renovation in

new

Montréal. Pricing from five years ago no longer exists,

development. Though the pandemic has slowed down the

especially for material costs. For example, the price of

condo market, do not underestimate its growth once

drywall itself is up 60 per cent. In February, the federal

borders reopen and the COVID vaccine is widely available.

government introduced a subsidy to help landlords

It is expected that some suburban and recreational homes

renovate units in need of repair that are competitively

purchased in 2020 will return to the market once the

priced in the rental market. Buildings that qualify could

pandemic subsides and people are drawn back to

receive 30 to 40 per cent of renovation costs back – up to

city-living. Suppose there is a rush of inventory to market

$14,000 per unit or $500,000 per building. The program

simultaneously? Properties listed could take longer than

came into effect April 1.

usual to sell, creating unfavourable conditions for sellers

5

Canadian

hub

for

pre-construction

condo

and a potential price drop.

5

City of Montréal, February 2020

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Ottawa

Record $10 billion worth of property sold in Ottawa in 2020. Engel & Völkers is projecting a price rise of 15% in 2021.

Home fetches $4.8 million in Rockcliffe Park,

The most significant shift in the market as a result of

signifying change in Ottawa’s high-end

COVID is the demand for more space. People are moving out of condos and migrating to the suburbs and rural

Ottawa finished the year as a seller’s market on the rise.

areas, a broad trend in the industry. Suburban homes in

Year-over-year, prices grew by a tremendous 10.4 per

Kanata, Orleans and Barrhaven, traditionally remaining on

cent for homes priced $4 million-plus. A notable sale in

the

the $4 million-plus category was made in September,

exponentially in price within a short period.

market

for

extended

lengths

of

time,

grew

closing at $4,825,000. As news of the sale broke in Ottawa, the number of listings in this price category grew. While the number of listings in this category usually hovers between zero and two a month, November witnessed this number jump to eight and ten in December. Condos priced between $1 million and $4 million made remarkable price gains of 7 per cent year-over-year. Homes in this price range grew by 4.1 per cent annually. The capital’s luxury market is rising overall, with $2 million-plus homes now prevalent in neighbourhoods like Westboro and McKeller Park. One property in McKeller Park listed at $2.5 million sold $100,000 over asking.

Homes priced $ 4 million-plus grew in value by

10.4 %

Condo supply is increasing as homeowners are moving to the suburbs. Those who remained in their condos became frustrated with their small space and the closure of amenities like pools and gyms. Despite this, inventory is still moving. For example, a 450 square foot condo listed in October sold after only three showings over a two-week timeframe. Pre-pandemic, it was common to have 15

The largest price gain occurred for homes under $1 million

showings in the same period. Overall, in-demand real

in the Greater Ottawa Region, which grew by an

estate continues to sell with multiple offers above list price.

enormous 18.6 per cent. Properties that were previously

By October, the Ottawa Real Estate Board (OREB)

sold for $450,000 are now going for $650,000. The year

reported the sale of 2,146 properties, a year-over-year

was characterized by unprecedented activity through

increase of 34 per cent. Of these sales, 1,665 were

December, with multiple offer situations occurring on

residential, up 38 per cent from the same month last year.

Christmas Eve and New Year’s Eve – as reported by Engel

The remaining 481 properties were condos, an increase of

& Völkers Ottawa Central.

22 per cent year-over-year.

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

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6358 Emerald Links Engel & Völkers Ottawa

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Ottawa moving up the pricing food chain

Ottawa market booming since lockdown restrictions lifted

Increased market activity is driving up prices, including a cohort on the move to Ottawa from Toronto. These buyers are purchasing properties offering better value per square foot compared to Toronto. By November, the overall average sales price for residential property increased by 25 per cent year-over-year to $603,253, a remarkable gain.6 Demand is consistent and sustained across the market.

Lower

price points are driving prices higher

The Ottawa market is growing strong despite COVID uneasiness. High-end homes are in demand as buying preferences shift towards properties with higher square footage. Buyers are seeking space to entertain outdoors, at-home gyms and zoom rooms, and are prioritizing contemporary finishes no matter the square footage or price point — a new trend for Ottawa.

across the entire market as buyers face competition and bidding wars.

6

Engel & 2020. Völkers Canadian Luxury Real Estate Market Report Year-End 2020 OREB, 18 October

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Condo supply rising, but not to the likes of Vancouver or Toronto

People relocating to rural areas

Most condo units are owner-occupied in Ottawa, as

recreational homes or permanent residency in rural areas.

Airbnb is not permitted. This means a low number of

Retirees are cashing out early while some young families

empty rental units remain on the market in comparison to

are making a move in anticipation of being able to work

Toronto and Vancouver. Historically, Asian buyers coming

from home indefinitely. They are creating communities for

to Ottawa traditionally purchase land rather than condo

themselves and in some cases relocating as a group with

units, meaning most condo inventory is locally owned.

friends or family. Rural communities like Almonte, Carleton

Cottage country is booming, with many buyers seeking

Place, Kemptville and Perth are now top destinations.

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Emotional quotient counts While

square

footage

is

standard

2021 Forecast for

property

Ottawa is holding its position as a reliable seller’s market.

measurement, it does not capture a home's emotional

Engel & Völkers is predicting market prices will increase by

quotient (EQ) measurement. These details are what

15 per cent in 2021. Pricing values may be affected in tall

constitute luxury when making equal square footage

buildings with many storeys, as people may no longer

comparisons. With more people staying home for work,

want to wait for elevators to take up residents in small

play and entertainment, Engel & Völkers Ottawa Central

groups while others will refuse high-density buildings.

forecasts EQ within Ottawa properties will advance as people renovate and reconfigure their homes to adapt to the new normal of staying home.

Currently, there is a buying opportunity in the rare downtown penthouse market. Units are available with less competition, but this will only last a limited time. Mechanicsville, Vanier North, Glabar Park are new hot neighbourhoods to watch.

“ Young families are interpreting how they use space for new at-home lifestyles, bringing up the overall EQ measurement of homes in the marketplace. Sightlines, livable space and entertaining space are vital factors differentiating two homes with the same square footage. ” Deb Cherry, Engel & Völkers Ottawa Central

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Toronto

Limited buying opportunity in Toronto’s condo market. Engel & Völkers is projecting a price rise of 5% in 2021.

Freehold home market soars, while condos lose darling status

to unprecedented levels usually reserved for downtown

A busier than usual January helped Toronto begin 2020

In July, 145 condos were sold in the $1 million to $4

with a sizzle. February saw the highest number of new

million category, marking the yearly high. In the $4

home sales since 2002. Before March’s lockdown, 2020

million-plus category, the annual high occurred in

was projected to be a record-breaker for real estate sales

September, where seven units were sold. This sales data

in Toronto. In April, home sales dropped by 70 per cent

reflected what was happening on the ground. Demand for

year-over-year. By year-end, 95,151 sales were reported –

square footage increased as the year progressed, while

up by 8.4 per cent compared to 2019. The month of

sales of smaller units declined.

December was especially notable, recording 7,180 sales – a year-over-year increase of 64.5 per cent. The average selling price for all home types in December was $932,222, an 11.2 per cent increase year-over-year.

Toronto.

In contrast to single-family inventory, the condo market became a place of choice rather than scarcity, as it had been in years past. The number of new condo listings in November almost doubled compared to the same month

Through 2020, luxury inventory in Toronto remained

last year. Higher inventory coupled with low-immigration

limited, creating a balanced market in both the $10

and tourism translated into a small year-over-year price

million-plus and $4 million-plus categories. On the other

decline in the 416 area code.

hand, the standard detached market from $1 million to $4 million had a heavyweight year, particularly in sought after neighbourhoods.

2020 saw average sales prices for all homes grow by

The shift to working from home created the demand for large living areas, zoom rooms and outdoor spaces for entertaining. Interest in outlying areas of the city grew as restaurants, entertainment and office-life quickly faded away.

As demand for detached and semi-detached

homes

rose,

demand for

condos

11.2%

declined. As the

pandemic unfolded, activity in cottage country spiked 21

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1405 The Grange Side Rd. Engel & Völkers Toronto Central

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7

Lakelands Region, December 2020

8

BILD, October 2020

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Rather than examining short term volatility, potential buyers should review the five-year growth trend to indicate how a property of interest will perform. Those looking for a deal should act in the first quarter of 2021. Sellers are willing to negotiate and make accommodations favouring buyers. This will continue while borders remain closed, and immigration is on hold. With the COVID vaccine already circulating in

Engel and Völkers Toronto Central saw a 12% increase in average sales price for all deals combined closed by the shop.

Ontario, a path to normalcy is in view.

City of Toronto votes to move forward with vacant homes tax On December 16, the City of Toronto voted in favour of moving forward with a vacant homes tax. The rationale behind the decision is to ensure housing inventory is used for living in, rather than pure investment. Once the tax becomes law, investors purchasing property for capital gains will have to offer vacant units as rentals or be subject to tax. The percentage is to be confirmed. However, in Vancouver, this tax now sits at 3 per cent. The success of this new tax remains to be seen. With the

2021 Forecast Toronto’s high-end housing market is balanced, while its standard housing market favours sellers. The condo market transitioned into a buyer’s market in late 2020, but this is temporary. Engel & Völkers Toronto is predicting market prices will increase by 5 per cent in 2021. The condo market is offering a brief buying opportunity, and buyers on the sidelines shouldn’t hesitate to jump in while sellers are willing to negotiate.

average rent in Toronto dropping by over 17 per cent

A vacant homes tax could slow down real estate growth

through 2020, the tax is ill-timed. In October, the vacancy

for a short period, but this will adjust once the city returns

rate in the Greater Toronto Area increased to 2.8 per cent

to its regular rhythmical pattern. Before the pandemic,

from 0.7 per cent year-over-year. Looking at the data,

Toronto was the fastest growing city in Canada and the

implementing this tax may be more appropriate when the

U.S., welcoming 46,000 new people in 2019. These

rental market stabilizes.

numbers should not be underestimated.

“ As borders reopen, there will be a backlog of new immigrants waiting to come to Canada’s biggest city. This, coupled with students returning to universities, will quickly infringe on supply. With the end of the pandemic in view, there will be a short window to capitalize on these temporary market conditions.” Anita Springate-Renaud, Engel & Völkers Toronto Central 26

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Vancouver

Vancouver market driven by locals looking to move down, move up or move out. Engel & Völkers is projecting a price rise of 5% in 2021.

Market Overview

The number of single detached homes sold

Vancouver’s 2020 market was characterized by locals looking to level up. Indeed, the number of units sold above $4 million consistently grew throughout the year. October saw the year’s high, with a significant 61 units sold in this

above $4 million consistently trended upward leading to a price increase of

8%

category. By fall, Engel & Völkers Vancouver surpassed its sales volume from the previous year. Demand sustained

second property or hold on to their savings. Some cashed

through year-end, exemplified by a $6.4 million Point Grey

in their urban property and headed for a recreational

home sold within one week in mid-December.

market permanently.

Through 2020, the benchmark price for condos increased

Off-market activity continues to occur discreetly, with high

2.6 per cent, townhomes increased 4.9 per cent, and

profile sellers making moves in private. On the buyer side,

detached homes increased 10.2 per cent in the Greater

many are searching for off-market hidden gems in a

Vancouver Region.9 In the $4 million-plus segment,

competitive market. Private sales also became more

single-family detached home prices grew by 8 per cent

prevalent as some sellers preferred to avoid the impression

while condos grew by 1.6 per cent year-over-year.

of selling for financial reasons related to COVID.

Unique homes with thoughtful design and high-concept

The detached standard market from $1 million to $3 million

finishes received the most interest. However, buyers and

favoured sellers. In particular, properties priced correctly in

sellers traded home types across the spectrum of

promising or established neighbourhoods sold quickly.

Vancouver’s property market. As people stayed home,

Attached townhomes had an exceptional year, especially

they reevaluated their spatial needs in the context of the

as condo dwellers sought to level up their living spaces.

new normal. Keeping in step with people who upsized,

Detached homes in suburbs like East and North Vancouver

there were many who decided they wanted to maintain

are in very high demand by locals, especially young families

less space and downsize, and invest their savings in a

looking for more space. As a result, townhomes and duplexes saw an increase in sales in 2020.

9

CREA, December 2020

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602 2958 Burfield Place Engel & Völkers Vancouver

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“ Sellers recognize the worth of their homes and

The percentage of new listings for all homes priced

are generally unwilling to let their investment sell

between $1 million and $3 million dropped by 17.3 per

below their perceived market value. Historically,

cent from August to November, indicating sellers have

this seller behaviour proves to be a price preserver in the high-end sector, despite it being a buyer’s market. Rather than experiencing price drops, the market sees increased listings and extended

made their moves. If this persists into 2021, the market could see a return to pre-pandemic market conditions where demand outpowers supply.

A critical window in the condo market

absorption periods. ” The condo market is entering 2021, showing signs of Andrew Carros, Engel & Völkers Vancouver

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weakening. The number of condo units for sale is on the

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rise, presenting a short window of opportunity for buyers,

Through the summer, the market kept moving. While the

giving them more choices and time to shop downtown

appeal to live in an urban condo has mostly dissipated,

Vancouver. This pressure relief is an overall positive for the

prices held through year-end driven by buyers who saw an

market where high demand and multiple offer situations

opportunity to enter the market at an affordable rate.

are a barrier to entry. Despite increased supply, buyers should not expect sellers to accept low-ball offers.

Even though the number of units is rising, condo stock will still be limited. Vancouver's downtown core is small, built

This was the year Vancouver condo owners traded up for

on a peninsula of land connected by bridges on all sides. In

detached homes and townhouses. While this was

2021, there may be a small pricing correction, but buyers

happening, a new cohort of condo owners stepped up

should not wait for this. In the long term, buyers will save

when lockdown restrictions lifted in the summer, jumping

more by taking advantage of lower interest rates rather than

on the opportunity to own in downtown Vancouver.

delaying purchases and hoping for a price drop.

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Perception of life has changed As a by-product of COVID, a shift is taking place in how

The Engel & Völkers

people view their lives, what matters to them most and

Vancouver shop closed

where they want to live. Remote work makes it easier for people to purchase real estate outside of the city. This

44.5% more transactions

new freedom is translating into spiked demand for homes

over $1 million in 2020

in suburban and rural areas. People have realized the

compared to last year.

importance of the outdoors, nature and mixed-use living spaces. Introspection and the evaluation of what’s essential will be a legacy of the COVID era. However, post-COVID, cities will continue to be the heart of what drives

the

Vancouver

region.

The

convenience,

restaurants, nightlife and entertainment are thriving drivers.

continued interest from the United States. Once borders reopen, the market will likely see some American buyers make a permanent move to Vancouver.

Many who left the city during the COVID era will crave a return.

Renters becoming homeowners

Hong Kong interest yet to materialize Engel & Völkers Vancouver reports little buyer activity from Hong Kong, even after the Canadian government

As a result of low mortgage rates, people who would typically rent are becoming first-time buyers. Renters who usually pay $2,000 per month in the city have realized they can buy a home outside of the downtown core, have more space, and feel the security of homeownership during these difficult times.

Interest from the United States sustains

announced it is making it easier for citizens and asylum seekers to enter Canada. On November 12, the Canadian government announced a new immigration initiative designed to attract students and youth from Hong Kong to Canada by offering a new open work permit and permanent

residency

pathways.

The

government

announced dual citizens and Canadian residents in Hong Kong could return to Canada at any time, and the

Interest in Vancouver from the United States continued

Canadian government will expedite documents. Family

through to the end of the year. Uncertainty around COVID,

members of Canadians in Hong Kong and Canadian

political unrest and California’s ongoing wildfire issue are

permanent residents are exempt from travel restrictions,

key influencers. Engel & Völkers Vancouver is reporting

though they must be quarantined for 14 days upon arrival.

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2021 Forecast Engel & Völkers is forecasting prices will increase by 5 per cent in 2021. The detached high-end segment is a buyer’s market, with sellers holding out for the best offers. The detached standard market remains a seller’s market, while the condo segment is transitioning to favour buyers. The market will move at an unhurried pace next year, slowing growth. The first quarter will see limited activity, especially if lockdown restrictions remain. Homes in the $4 million-plus category will remain in demand due to a limited local buyer pool. There is a notable amount of private dealings happening.

Engel & Völkers is forecasting prices will increase in 2021 by

5%

The detached standard market is a balanced market

see this as an opportunity to buy, it will not take much

leaning towards sellers. Architecturally exceptional homes

activity for prices to bounce back.

command the most interest for homes priced between $1 million and $3 million. Locals who were looking to buy or sell took the opportunity to do so in 2020, which may limit local activity in the new year.

By year end, 95,151 sales were reported – up by 8.4 per cent compared to 2019. The month of December was especially notable, recording 7,180 sales – a year-overyear increase of 64.5 per cent.

Meanwhile, the condo market is showing signs of transitioning into a buyer’s market. By summer, prices in the condo market may come down, but only softly. For buyers looking to make an advantageous transaction, Engel & Völkers Vancouver recommends looking within the high-end luxury condo market downtown. Presently, this is the segment with the most inventory. If locals

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Victoria

Sales volume in the $4 million-plus category grew by more than 500 per cent. Engel & Völkers is projecting a price rise of 8% in 2021.

Low COVID case counts and island-living drive phenomenal growth in Victoria

spanning 15,409 square feet for which Engel & Völkers

Victoria’s luxury real estate market is experiencing

Typically, approximately 60 per cent of real estate

exponential growth amidst COVID, finishing 2020 with one

transactions in this market are completed between March

of the best years on record. In 2020, there were 114

and June. This year, the spring season experienced a

waterfront home transactions worth $295 million, with 17

temporary stop. As restrictions eased, pent up demand

properties sold for over $4 million. Of those 17 properties,

for more space and seclusion rose precipitously. From

Engel & Völkers brokered the sale of five. In comparison,

November to December 2020, inventory decreased by

the market had 85 waterfront sales worth $165 million

29.5 per cent. Year over year, the number of active listings

with three sales of properties priced over $4 million in

decreased by 34.5 per cent by December. This is the

2019, and this high demand for waterfront homes will

lowest inventory level at month-end in at least 25 years.10

brought the buyer.

continue into 2021. Buyers flocking to Victoria are seeking properties with acreage where they can live undisturbed in isolation, surrounded by natural beauty. At the same time, Victoria’s quaint downtown offers boutiques, restaurants, poetic gardens and harbour views. It maintains a small, big-city feel, with the air of a local town. Waterfront sales volume doubled through the year, with homes of rarity and prestige commanding the highest prices. Engel & Völkers represented a buyer or seller in three out of the top six most notable property sales closing at over $7 million this year. The highest sale price recorded was $9.5 million for a private waterfront property

“ The market has been nothing short of insane as it relates to volume, prices and speed in which we are selling properties since restrictions were lifted. Domestic buyers from across Canada are coming to Victoria to seek ownership of considerably large homes with acreage.” James LeBlanc and Scott Piercy, Engel & Völkers Victoria

10

CREA, December 2020

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4810 Prospect Lake Engel & Völkers Victoria

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By November, benchmark prices for single-family homes and condos increased year-over-year, rising to $813,700 from

$752,300

and

$508,400

from

Domestic buyers make up for decrease in foreign interest

$505,500,

respectively. The condo market was irregular, showing

Cross-border interest in Victoria has waned during the

moments of enthusiasm amidst scattered market interest.

pandemic, but Canadians are picking up the slack. Buyers are coming from Alberta, Saskatchewan, Quebec and

Exponential growth in 2020

Ontario. Domestic migration from Quebec and Ontario grew by 0.5 per cent year-over-year, reaching four per

Sales volume in the $4 million-plus category grew by over

cent. Vancouver is putting pressure on Victoria with many

500 per cent. Engel & Völkers is reporting an exceptionally

cashing-out on their homes and buying in Victoria at a

active market. Low-interest rates coupled with Victoria’s

lower cost. While foreign buyers are still purchasing, many

livability have created prime seller’s market conditions. In

are offsetting taxation with the value of their currency. In

November 2019, Engel & Völkers brokered 35 deals. For

particular, Americans are putting significant pressure on

comparison, Engel & Völkers brokered 90 deals during the

the market. Engel & Völkers Victoria reports fielding ten

same month in 2020. By November 2020, there were 22

calls per week from the United States requesting

deals in the $4 million-plus waterfront property class of

waterfront property information. On the other hand,

which Engel & Völkers brokered nine. At the start of 2020,

demand from Asian buyers has diminished in recent years

the average days on market for a waterfront home was

because BC’s foreign-buyers and vacancy taxes have

111 days. By year-end, it shrunk to 70 days.

been a deterrent.

Top ranking tech sector Victoria’s innovation sector is thriving and positioned for

By December 2020, the number

growth in 2021. Last year, some companies reported a

of active listings decreased by

lack of space as a limitation for development in the area. However, the shift to work from home has created an opportunity for the sector in Victoria. The city’s relaxed environment and mild weather give it a Silicon Valley feel.

34.5%

The total economic impact of this sector is $5.22 billion, employing 16,775 people.11 Exponential technology sector growth has boosted Victoria’s real estate market as a destination attracting young business professionals.

11

VIATEC, 2018

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In 2020, Engel & Völkers Victoria saw transactions over $1 million grow by 46.7% year-over-year.

2021 Forecast Engel & Völkers is predicting market prices will increase by 8 per cent in 2021. In the high-end sector, Victoria is finishing the year as a strong seller’s market. Sellers taking advantage of high demand this summer have made their moves and sold, putting pressure on inventory. Compared to other Canadian cities, Victoria is still relatively underpriced. Those purchasing now can do so knowing there will be price growth. Spring is expected to be busier than 2020, as inventory is low while demand continues to rise. Private waterfront properties offering seclusion are expected to become scarce. Sales to domestic buyers and Canadian expatriates are on the rise as Victoria keeps its COVID case counts low. Historically low interest rates will also drive the market, as people get more for their money. First time home buyer relief will be introduced in 2021, putting upward pressure on the residential market. As buyers level up, every housing type in Victoria will feel the effects of increased demand.

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evrealestate.com ©2021 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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