2018 Mid-Year Top-Tier Report

In the Greater Toronto Area (Durham, Halton, Peel, Toronto and York), market confidence and top-tier sales activity renewed in the first half of 2018 as consumer psychology recovered from the April 2017 introduction of the Ontario Fair Housing Plan, particularly within the City of Toronto. Given unprecedented gains in the region’s $1 million-plus sales volume from 2015 to 2017, with surges of 56% in 2015 over 2014, 65% in 2016 over 2015, and 41% in the first half of 2017 over the first half of 2016, year-over-year comparisons of 2018 to 2017 sales activity mask the region’s market resilience. On the surface, $1 million-plus residential real estate sales fell 46% year-over-year in the first half of 2018, while sales over $4 million fell 51%. However, 2018 sales volume trended in line with 2015’s pre-surge levels: GTA $1 million-plus real estate sales in the first half of 2018 increased 25% from the number of units sold in the first half of 2015, while sales over $4 million were up 72%.

Following 20% gains in $1 million-plus sales volume in 2017, the City of Montreal was the only major Canadian city to see year-over-year growth in sales over $1 million in the first half of 2018 with a 24% increase to hit new records. However, there were hints that this momentum will level off in the latter half of 2018.

“The collision of rising mortgage rates, stricter lending guidelines and cascading governmental policies and taxes have impacted the performance of several top-tier Canadian markets,” says Brad Henderson, President and CEO of Sotheby’s International Realty Canada.  “While the Toronto top-tier market remained remarkably resilient in the first half of 2018, and Montreal continued to exude growth and confidence, the Vancouver and Calgary markets decelerated as consumer optimism and local purchasing power diminished.”

According to Henderson, erosion of homebuyers’ purchasing power, particularly in the market for real estate below the $2 million threshold, has rechanneled an additional cohort into the top-tier condominium and attached home markets in Toronto and Vancouver, elevating demand and sustaining price gains. Canadian top-tier real estate market highlights included:

TORONTO

Top-tier real estate in the GTA (Durham, Halton, Peel, Toronto and York) reflected remarkable resilience in the first six months of 2018 as consumer confidence and market activity renewed following a lull after the April 2017 implementation of the Ontario Fair Housing Plan.

• The resurgence was masked by comparisons to unprecedented gains in the GTA’s $1 million-plus real estate market from 2015 to 2017. $1 million-plus residential real estate sales (condominiums, attached and single family homes) increased 56% in 2015 over 2014, 65% in 2016 over 2015, then peaked 41% year-over-year at new records in the first half of 2017.
• In contrast, during the first half of 2018, a total of 7,684 properties over $1 million sold in the GTA, a 46% year-over-year drop when compared to 2017’s historic highs, while luxury sales over $4 million declined 51% to 127 units sold.
• In the City of Toronto, 3,526 properties sold over $1 million and 91 properties sold over $4 million during the first half of 2018, a decline of 32% and 52% respectively.
• Despite declines relative to 2017, 2018 sales trended above 2015’s healthy market activity. GTA $1 million-plus real estate sales in the first half of 2018 increased 25% from the 6,152 units sold in the first half of 2015 while sales over $4 million were up 72%.
• Compared to the same period of 2015, sales over $1 million in the City of Toronto were up 14% in the first half of 2018, while sales over $4 million were up 44%.
• Compared to 2017’s historic highs, GTA $1 million-plus and $4 million-plus single family home sales decreased 49% and 52% year-over-year to 6,220 and 116 units respectively. Relative to strong, pre-peak $1 million-plus sales volume in the first half of 2015, GTA single family home sales over $1 million were up 13% while sales over $4 million were up 66%.
• While $1 million-plus attached home sales volume fell 42% compared to 2017 levels, and $4 million-plus sales fell from three to two units sold, activity reflected limited inventory rather than soft demand. 57% of $1 million-plus attached homes sold above list price in the GTA after spending an average of 15 days on the market, the highest percentage of above-list sales and the shortest number of days on market for residential housing types in the $1 million-plus segment.
• Similarly, while GTA condo sales over $1 million fell 13% in the first half of 2018 to 658 units and luxury condo sales over $4 million fell 40% to nine units, 31% of the sales took place above list price. Condo sales velocity stayed in line with the brisk pace experienced in the record-setting first half of 2017, at an average 25 days on the market.

MONTREAL

Following market momentum in 2017 that drove $1 million-plus sales volume up 20% compared to 2016, top-tier sales in the City of Montreal continued at a strong tempo in the first half of 2018, hitting new records and outpacing gains in other major Canadian cities. The market has been driven by strong local demand and has been undeterred by rising interest rates and new mortgage rules by Canada’s federal financial regulator. The city has also been sheltered from provincial and municipal cooling policies that have moderated sales in Toronto and Vancouver.

• Overall $1 million-plus residential real estate sales (condominiums, attached and single family homes) in Montreal experienced a 24% year-over-year increase in the first half of 2018 compared to the year prior, totaling 460 sales. $1 million-plus condominiums led in year-over-year percentage gains of all property categories as sales jumped 25% year-over-year to 81 condominiums sold.
• Multiple bidding wars sparked amongst purchasers, as a result, 14% of $1 million-plus condominiums sold above list price. Montreal’s top-tier attached market surged throughout the first half of 2018, with sales over $1 million increasing 58% year-over-year to 171 units.
• The single family home market saw a 5% increase from the first half of 2017, with 208 units sold in 2018 compared to 199 units sold the same year prior.