The market for homes priced over $1 million is growing and will keep growing at least into early 2015, says Sotheby's International Realty Canada. In its annual Fall Forecast, released September 4, the luxury real estate agency noted that historically low interest rates, strong economic fundamentals, and an imbalance between supply and demand are driving the trend.
The City of Vancouver and the Greater Toronto Area led the country in the growth of $1 million-plus MLS® home sales in the first half of 2014. Both markets saw a 34 per cent increase in that price range. The top end of the market grew by 17 per cent in Calgary and 11 per cent in Montreal.
Sotheby's forecasts that Vancouver East and West, the two areas included in the report, "will continue to experience modest but positive momentum in the sales of homes over $1 million, driven primarily by low interest rates, high consumer confidence and favourable economic conditions."
Greater Toronto will "see exceptional market gains" in the coming months, as it was the only urban centre where $1 million-plus sales of every housing type increased, according to the report. "The market is expected to favour sellers into fall 2014, driven by lack of inventory and strong consumer demand for single-family homes," the report states. "In turn, this is expected in impact condominiums, as buyers priced out of the attached and single-family home market look for alternatives, and migration and immigration into the urban core continues."
In the first half of this year, sales of $1 million-plus single-family houses increased to 1,317, up 38 per cent from the same period in 2013. The report report sees houses continuing to lead the high-end market for the rest of the year. With the MLS® benchmark price of a house on Vancouver's west side currently at$2,282,400 and on the east side at $936,500, that comes as no surprise.
Another trend in the $1 million-plus single-family category is that these homes are selling above asking price and selling faster. In the $1 2 million price range, 30 per cent went above asking, compared to 17 per cent at the same time last year. They were on the market for 30 days in the first half of this year compared to 41 days for the same period in 2013.
High-end condo sales increased by 37 per cent compared to the first half of 2013, with the $12 million category jumping 47 per cent to 193 units.
Sales of attached homes over $1 million dropped by 2 per cent to 104 units from January to June, but then increased significantly in the summer months. The forecast calls for more high-end townhouse/duplex sales into the rest of the year. Vancouver is woefully low on inventory in that category, while buyers who are priced out of detached houses look for a ground-oriented alternative within city limits. As a result, 19 per cent of high-end attached properties sold over asking price almost double the 10 per cent in the first half of last year.
More detail is available in the Sotheby's International Realty Canada Top-Tier Real Estate Report, based on data from January 1 to June 30, 2014.
See also:
August Home Sales Up 10%, Prices Up 5%: REBGV
Third of Vancouver Single-Family Homes Sold to Chinese Buyers: Macdonald Realty
Opinion: Affordable Housing Concerns Here to Stay
Lower Mainland Q2 Home Sales Value Up 17%: Landcor
