Toronto, Ontario , — A new report released today by Sotheby’s International Realty Canada(sothebysrealty.ca) revealed that the performance of the country’s top-tier real estate markets veered in separate directions in the first half of 2019, even as second-quarter gains in the country’s economy stabilized overall housing demand. The Greater Toronto Area (GTA) market revitalized with healthy increases in sales over $1 million, while Montreal’s $1 million-plus real estate sales achieved new records in condo activity and balanced gains overall. In spite of renewed conventional real estate activity in Calgary, market recovery lagged in the top-tier segment, which remained entrenched in buyers’ market territory. Meanwhile, slowing sales and excess inventory burdened Vancouver’s market for real estate over $1 million and falling prices recalibrated demand across the city’s housing market.

Following record-setting sales activity and price gains in 2017, the Greater Toronto Area (Durham, Halton, Peel, Toronto and York) top-tier real estate market adjusted to healthier levels over 2018 and into 2019. Consumer demand was resilient, bolstered by optimistic projections that the Toronto economy is set to lead Canada’s major metropolitan areas in growth in 2019. As a result, top-tier sales in the first six months of the year reflected confident gains in spite of a prolonged winter that delayed spring real estate activity. In the first half of 2019, residential real estate over $1 million sales (condominiums, attached and single family homes) in Canada’s largest real estate market renewed with a 12% increase from 2018 levels. Luxury real estate sales over $4 million on the Multiple Listings Service (MLS) fell 19%, a shortfall due in part to a shift in luxury sales to exclusive sales and marketing channels following recent Competition Bureau rulings that make MLS transaction data publicly available. The City of Toronto’s top-tier real estate market outperformed surrounding areas: sales over $1 million were up 13% year-over-year in the first half of 2019, while sales over $4 million steadied with a nominal 2% dip.

Sales of City of Montreal real estate over $1 million in the first half of 2019 reflected a vibrant, expanding luxury market. The city surpassed other Canadian major metropolitan real estate markets in year-over-year percentage gains in top-tier condo sales and is on track to follow record-setting gains in 2017 through 2018 with another banner year. Residential real estate sales over $1 million (condominiums, attached and single family homes) increased 5% in the first half of 2019, while sales over $4 million were up 267% year-over-year. Diminishing supply and enduring local demand perpetuated sellers’ market conditions and price gains across all housing types.

The market for real estate over $1 million decelerated in the City of Vancouver in the first half of 2019 as the market continued to bear the burden of tightened mortgage rules, multiple governmental policies and taxes, hesitant sellers and fickle buyers lacking motivation to commit to transactions. According to Sotheby’s International Realty Canada experts, the disparity between purchaser and seller pricing expectations continued to reconcile over the first half of the year. While an uptick in home buyer interest and open house activity did not translate into consistent gains in the first quarter, by mid-year, quality properties priced for 2019 buyers’ market conditions were drawing bids, and in occasional instances, bidding wars. Overall $1 million-plus real estate sales (condominiums, attached and single family homes) fell 33% from 2018 levels, while $4 million-plus luxury sales declined 34%.

In the City of Calgary, a gradual economic recovery and easing housing prices re-engaged purchasers in the market for homes under $500,000 in the first half of the year. $1 million-plus market performance was inconsistent; activity in certain top-tier neighbourhoods strengthened, while others remained quiet. Market conditions continued to skew heavily in favour of buyers, and supply continued to surpass demand, placing downward pressure on prices. Sales of residential real estate over $1 million (condominiums, attached and single family homes) fell 21% in the first six months of 2019 from previous year’s levels.

“Eastern Canada’s two key metropolitan areas continued to lead Canadian top-tier real estate performance in the first half of 2019. Toronto’s revitalized top-tier market reflected renewal in consumer psychology now that the impact of recent policy and mortgage lending changes have been assimilated, as well as broader renewal of confidence in the nation’s economic performance,” says Don Kottick, President and CEO, Sotheby’s International Realty Canada. “Over the past few years, Montreal has also emerged as one of Canada’s most vibrant luxury real estate markets due to its strengthening economic fundamentals. In the first half of this year, it was the city’s condominum market that surpassed expectations with year-over-year percentage sales gains that outstripped other major cities’ performance.”

According to Kottick, recent price declines in Vancouver and Calgary have created opportune conditions for prospective high-end home buyers to enter the market, upgrade their homes, and to access property types and neighbourhoods that may have been previously out of reach. There are strengthening signs that top-tier real estate consumers are preparing to re-engage in both markets in the latter half of 2019.

Vancouver
Top-tier sales activity in the City of Vancouver decelerated in the first half of 2019 as the market continued to absorb the compounding effects of tightened mortgage lending rules, multi-tiered governmental policies and taxes, and waning motivation from buyers and sellers to commit to transactions. An uptick in home buyer interest and open house activity in early spring did not translate into consistent renewal of sales activity. However, there are strong signals that pent-up demand, as well as the gradual reconciliation of sellers’ pricing expectations to current market conditions, are setting the stage for activity at new levels in the latter part of the year. By mid-2019, quality properties priced for 2019 conditions were attracting motivated buyers and intermittent multiple offers, however, overall $1 million-plus residential real estate sales (condominiums, attached and single family homes) fell 33% from 2018 levels to 1,308 properties sold, while luxury sales over $4 million fell another 34% to 73 sold.

Following a 35% reduction in single family home sales over $1 million in 2018 from 2017 levels, Vancouver’s single family home market continued to see a slowdown in activity in the first half of 2019. Overall $1 million-plus single family home sales fell 18% year-over-year to 723 homes sold between January 1 – June 30, while luxury sales over $4 million fell 23% to 66 homes sold. While significant affordability barriers to home ownership remain, rising supply and price declines have created opportunities for prospective top-tier real estate buyers to reconsider single family housing.

Vancouver’s top-tier condominium market had remained comparatively resilient in 2018, however, data in the first half of 2019 revealed emerging vulnerabilities. Activity declined more steeply than in the single family and attached home segments, as these had undergone earlier transitions into buyers’ markets. Overall $1 million-plus condominium sales decreased 51% in the first six months of 2019 compared to the same time period last year. Luxury condominium sales over $4 million saw a more significant decline with a 78% year-over-year decrease in sales volume to five units sold in the first six months of 2019. Sales of $1 million-plus attached homes decreased 32% to 236 homes sold in the first six months of 2019, while luxury $4 million-plus attached home sales activity did not change; there were two homes sold in both the first six months of 2018 and 2019.

Evolving conditions in Vancouver real estate have created opportunities for prospective top-tier real estate buyers to reevaluate housing options previously out of reach. With market recalibration well underway, activity is expected to regain momentum.

Calgary
Calgary’s economy is projected to see steady growth over the next five years, according to Calgary Economic Development’s recently released Calgary and Region Economic Outlook. The easing of housing prices in the first half of 2019 brought some purchasers back into the market overall. As a result, the Calgary market was dynamic in the first half of 2019, driven by renewed activity in the market for homes under $500,000. However, recovery in the top-tier real estate market continues to lag, with a long-anticipated rebound still elusive in the first half of 2019.

Overall sales of $1 million-plus residential real estate (condominiums, attached and single family homes) declined 21% in the first six months of 2019, with 275 properties sold. There was one transaction over $4 million in the first half of 2019, up from the same period last year.

Single family home sales over $1 million fell 20% to 243 homes sold in the first six months of the year; of these, seven, or 3%, were sold over asking price, reflecting market realities that require sellers to price homes appropriately to complete a sale. One single family home sold over $4 million in the first half of 2019, up from zero sold above this threshold in the first half of 2018. 26 attached homes sold over $1 million in the first six months of the year, a 10% year-over-year decline.

As heightened downtown office vacancy rates, lower downtown employment, and the proliferation of top-tier housing alternatives continued to weigh on demand, Calgary’s luxury condominium market remained quiet in the first half of 2019. Sales over $1 million fell 65% to six condominiums sold.

Calgary’s housing market is starting to come into alignment, as sellers continue to adjust their pricing expectations. With the conclusion of the provincial election offering fresh optimism, and growth forecasted for the next half decade, it is expected that the city’s top-tier market will continue to see a gradual recovery.

Toronto
Canada’s largest real estate market was steady and confident in the first half of 2019, as population gains and a solid economy bolstered conventional and high end housing demand. Consumer confidence posted strong gains in Ontario in June 2019, as expectations for a stable labour market, employment rate and household budgets took a positive turn, and rippled into new activity in the real estate market.

In spite of an uncharacteristically prolonged winter that dampened the start of the spring real estate cycle, $1 million-plus sales activity revitalized in the first half of 2019. A total of 8,612 residential properties (condominiums, attached and single family homes) over $1 million sold in the GTA, up 12% from last year’s levels. Luxury sales over $4 million on the Multiple Listings Service (MLS) contracted 19% year-over-year to 103 properties sold in the first half of 2019; however, this decline is partly attributed to the shift of many luxury home sales to exclusive channels off the MLS following recent Competition Bureau rulings that make transaction data publicly available. In the City of Toronto overall residential real estate sales over $1 million increased 13% to 3,992 properties sold in the first half of 2019, while sales over $4 million on the MLS for the City of Toronto held steady with a nominal 2% dip from the first half of 2018 to 89 properties sold.

Top-tier single family home demand was robust across the GTA, with sales over $1 million increasing 11% year-over-year in the GTA to 6,895 homes sold in the first half of 2019; while City of Toronto single family home sales over $1 million increased 10% over 2018 levels to 2,457 homes sold. GTA $4 million-plus single family home sales on MLS declined 19% year-over-year to 94 units tracked as luxury sales moved to exclusive channels, while single family home sales over $4 million in the City of Toronto remained on par with 2018 levels at 80 homes sold in the first half of 2019.

Toronto’s top-tier condo market remained dynamic and active as urban population gains, as well as the shifting housing preferences of young professionals and an aging and “rightsizing” population continued to sustain demand. Overall sales of condominiums over $1 million increased in the GTA with 722 units sold in the first half of 2019, a 10% year-over-year uptick; while condo sales over $1 million in the City of Toronto also resurged with 655 units sold in the first half of 2019, a 9% year-over-year increase. As luxury transactions moved to exclusive channels, four luxury condominium sales over $4 million were tracked on MLS in the GTA in the first half of 2019, down from nine in the first half of 2019; these were all sold in the City of Toronto.

Attached home sales over $1 million in the GTA increased 23% in the first half of 2019 from the first half of 2018 to 995 homes sold, with a significant 60% of homes sold above asking price. Luxury attached home sales over $4 million increased from two units sold in the first half of last year to five sold in the first half of 2019. Within the City of Toronto, attached home sales over $1 million increased 28% in the first half of the year to 880 units sold, with a monumental 67% selling above asking price, while sales over $4 million increased from two to five units sold in the first half of 2019.

Restricted supply coupled with high demand continues to impact the GTA real estate market. Land-supply remains tight, prompting urban densification efforts that are stimulating the construction of higher density housing; however, this is being readily absorbed by an expanding population base. Toronto is also set to lead Canada’s major metropolitan areas in economic growth in 2019 at a projected growth rate of 2.4%, according to the Conference Board of Canada. As a result, the region’s optimistic economic outlook are set to lift conventional and top-tier real estate demand into the third quarter of 2019.

Montréal
Following record-setting sales and pricing gains in 2017 through to 2018, sales of real estate over $1 million in the first half of 2019 reflected a market that remains in expansion mode. Overall, $1 million-plus residential real estate sales (condominiums, attached and single family homes) in Montreal experienced a 5% year-over-year increase in the first half of 2019 compared to the year prior, totaling 484 units sold. Sales over $4 million increased 267% to 11 units sold in the first half of 2019.

Montreal’s luxury condominimum market is poised to set new records in 2019. Strong sales across the pre-construction, new and resale segments point to solid end user and investor demand for high-end, high-density housing in the expanding luxury market. In the first half of the year, percentage gains in Montreal condominium sales over $1 million surpassed the pace of that in all other major metropolitan cities, with a noteworthy 40% year-over-year increase to 113 units sold in the first half of 2019. This compared to 51% and 65% year-over-year declines in condo sales over $1 million in the City of Vancouver and the City of Calgary respectively, and a 9% year-over-year increase in condo sales in the City of Toronto in the first half of 2019.

Single family homes comprised over 42% of sales over $1 million in the City of Montreal in the first half of 2019, as a buoyant economy, competitive interest rates and the comparative price accessibility of luxury real estate encouraged Montrealers to purchase, sell or upgrade their homes. In the first half of 2019, single family home sales over $1 million remained stable with a 3% year-over-year contraction to 202 homes sold. Luxury single family home sales over $4 million surged 233% year-over-year to 10 homes sold in the first half of 2019. Attached home sales over $1 million remained stable with a nominal 1% year-over-year contraction to 169 units sold between January 1 – June 30.

With sales activity surpassing industry expectations in the first half of 2019, Montreal’s top-tier market is expected to achieve new heights into the third quarter of 2019.

About Sotheby’s International Realty Canada
Combining the world’s most prestigious real estate brand with local market knowledge and specialized marketing expertise, Sotheby’s International Realty Canada is the leading real estate sales and marketing company for the country’s most exceptional properties. With offices in over 32 residential and resort markets nationwide, our professional associates provide the highest caliber of real estate service, unrivalled local and international marketing solutions and a global affiliate sales network of approximately 990 offices in 72 countries and territories to manage the real estate portfolios of discerning clients from around the world. For further information, visit www.sothebysrealty.ca.

Disclaimer
The information contained in this report references market data from MLS boards across Canada. Sotheby’s International Realty Canada cautions that MLS market data can be useful in establishing trends over time, but does not indicate actual prices in widely divergent neighborhoods or account for price differentials within local markets. This report is published for general information only and not to be relied upon in any way. Although high standards have been used in the preparation of the information and analysis presented in this report, no responsibility or liability whatsoever can be accepted by Sotheby’s International Realty Canada or Sotheby’s International Realty Affiliates for any loss or damage resultant from any use of, reliance on, or reference to the contents of this document.

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Maxine Jakubke
604.738.2220
Maxine@talkshopmedia.com

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