Despite conditions of extreme uncertainty in public health and the economy due to the unprecedented global coronavirus (COVID-19) health crisis, new top-tier real estate market data reveals that the Greater Toronto Area, Vancouver and Montreal real estate markets are confronting a period of turmoil from a strong foundation.

The latest data compiled by Sotheby’s International Realty Canada reveal that Greater Toronto Area (GTA) residential real estate sales over $1 million more than doubled in the first two months of the year, soaring 107% year-over-year in January and February, while luxury sales over $4 million surged 75% during this time.  Bold gains were experienced across every housing type despite limited inventory, as $1 million-plus condominium, attached home and single family home sales climbed 117%, 52% and 115% respectively. Luxury condominium and single family home sales also rose significantly: six condominiums sold over $4 million in the first two months of the year compared to one during this period in 2019; while single family home sales over $4 million climbed 71%. Preliminary sales data for the first fifteen days of March also underscored the GTA’s strong foundation, as overall $1 million-plus and $4 million-plus sales increased 94% and 56% respectively.  

Vancouver’s top-tier real estate market rebounded in the first two months of the year, reflective of solidifying market fundamentals. Pent-up demand ignited $1 million-plus sales activity across the condominium, attached home and single family home markets, which surged 65%, 109% and 79% year-over-year. This resulted in an overall 80% increase in residential sales over $1 million in January and February, while luxury sales over $4 million surged 78%. $1 million-plus sales pulled back 19% year-over-year in the first 15 days of March.

Top-tier real estate sales over $1 million in Montreal rose 68% year-over-year in the first two months of 2020, while sales over $4 million rose 50%. The upswing in activity was experienced across all housing types, as condominium, attached home and single family sales over $1 million increased 92%, 63% and 60% respectively. In the first 15 days of March, sales over $1 million increased a more modest 15% from the same period in 2019.

Despite the heavy toll of steeply falling oil prices, real estate consumer anxiety, and a deeply entrenched buyers’ market, $1 million-plus sales in Calgary contracted a mild 8% year-over-year in the first two months of 2020. In the first two weeks of March, Calgary experienced a 5% year-over-year uptick in sales over $1 million, however, the city remains vulnerable to broader forces shadowing the market.

“Canadians are confronting unprecedented and historic times, and concerns for our collective health, economic prosperity and personal finances are running high. In spite of these monumental global forces, the most recent conventional and luxury real estate market data reveals that many of our country’s key markets are facing this turbulence from a solid foundation,” says Don Kottick, President and CEO of Sotheby’s International Realty Canada. “The Toronto, Vancouver and Montreal real estate markets experienced bold gains in the first months of 2020.  A shortage of listings inventory, pent-up consumer demand, and regional economic fundamentals position these markets for resilience in the months ahead. Furthermore, historically favourable mortgage lending conditions and extreme stock market volatility make Canadian real estate a desirable and secure investment. While uncertainty lies ahead, housing will remain essential, activity will continue and the long-term prospects for Canadian real estate are solid.”

According to Kottick, while Calgary’s real estate market remains vulnerable, real estate sellers across all Canadian markets require new strategies when marketing their home this spring, with digital advertising, videography, virtual reality tours and global marketing more important than in years past.

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Key Influences

Domestic Resilience Meets Global Headwinds

COVID-19 represents a grave and substantial threat to Canadian public health, trade, economic performance and business and consumer confidence in the coming months, the impact and duration of which are unknown. With a longstanding global reputation for overall stability and security the country is poised to confront unprecedented headwinds from a position of relative resilience. 

Prior to the unforeseen emergence of COVID-19, modest but steady gains were anticipated for the Canadian economy at the start of the year, with institutions such as the Conference Board of Canada forecasting growth rates in the range of 1.8%.  Quebec’s economic growth, which has seen annual gains averaging 2.6% since 2017, was anticipated to continue on a growth trajectory in 2020, while Ontario’s real GDP was forecast to increase 1.8%.  British Columbia was projected to post a strong 3.1% gain. In spite of challenging conditions, it was anticipated that Alberta would emerge from the previous year’s recession over the course of 2020. 

At the start of the year, key indicators suggested that the Canadian economy had been operating close to capacity; labour markets in most regions showed little slack and wages continued to firm. By February, Canada’s unemployment rate hovered at 5.6% as employment increased by 30,000 jobs, a nominal 0.2% gain. During this time, Montreal and Toronto’s unemployment rate fell below the national average at 5.5% and 5.4% respectively, while Vancouver’s unemployment rate fell to 3.4%, the lowest of the country’s largest metropolitan areas. At 7.4%, Calgary’s unemployment rate was virtually unchanged year-over-year in February. 

Canada’s overall economic resilience was reflected in a significant surge in conventional and luxury real estate sales activity in Montreal, Toronto and Vancouver in the first two months of 2020; these fundamentals are now key to stabilizing top-tier real estate market performance in times of turbulence. In contrast, the steepest global oil price decline in decades has rendered Calgary’s economy and top-tier real estate market more vulnerable. 

Top-Tier Real Estate Shortage, Pent-Up Demand to Support Market Absorption Rate

A shortage of conventional and luxury property listings, compounded by surging consumer demand, incited multiple offers and price escalation across three of Canada’s key metropolitan top-tier markets in the initial months of the year.

In Montreal, an unprecedented 28% year-over-year drop in overall residential real estate supply in January marked the most significant annual decline for the month in two decades, as well as the region’s 52nd consecutive month of falling supply.  At the same time the total inventory of homes for sale fell short of keeping pace with strong sales gains in both Toronto and Vancouver.  The overall scarcity of listings across the condominium, attached and single family home sectors was most acute in the market for housing under $2 million, but also permeated the luxury market, where a shortfall of supply in the cities’ premier neighbourhoods was met with robust demand that saw sales of $4 million-plus residential real estate rise 50%, 75% and 78% year-over-year in the first two months of 2020 in the City of Montreal, the Greater Toronto Area and the City of Vancouver respectively. 

While it is anticipated that there may be a contingent of real estate sellers and buyers that may hesitate to transact in the current market, these underlying fundamentals support absorption of new listings supply through the spring, as well as a rebound once market disruption is fully resolved. 

Mortgage Lending Environment to Stimulate Top-Tier Market Activity

Dramatic shifts in the mortgage lending environment in the preliminary months of 2020 are expected to stimulate conventional and luxury real estate activity this spring in Toronto, Montreal and Vancouver. These factors will also provide a measure of support to Calgary, as the city braces for the local economic impact of falling global oil markets and growing concerns of a provincial recession.

Prompted by concerns that the COVID-19 outbreak will have negative economic consequences, the U.S. Federal Open Market Committee lowered its target range for the federal funds rate to 1.00–1.25% on March 3, and then again to 0.00– 0.25% on March 15. Meanwhile, the Bank of Canada which dropped its target overnight rate to 1.25% on March 4, reduced it to 0.75% on March 13.  The ensuing drop in mortgage rates not only has a positive impact on the purchasing power of home buyers and real estate investors, but also positions conventional and luxury real estate as more favourable assets by lowering carrying costs and improving potential returns.  

At the same time, the loosening of Canadian federal mortgage financing rules previously implemented to deter rapid housing price gains and debt growth come into effect on April 6, 2020. The pending changes to the mortgage stress test will update the benchmark rate utilized to determine the minimum qualifying rate for insured mortgages to the weekly median five-year fixed insured mortgage rate from mortgage insurance applications, plus 2%. The announcement of these changes in February 2020 quickly bolstered real estate consumer confidence and is anticipated to encourage the entry of some home buyers sidelined by the previous stress test. 

Financial Market Turmoil Reinforces Real Estate Demand

In 2019, the endurance of a 10-year market bull room as well as significant volatility in major global stock indices towards the end of the year, prompted consumer and investor confidence to shift in favour of Canadian top-tier real estate.  According to Sotheby’s International Realty Canada experts, there was a notable increase in affluent real estate consumers utilizing top-tier real estate to diversify asset portfolios, buffer against inflation, and protect against stock market volatility. 

In light of COVID-19, sharp declines across all major indices has amplified consumer anxiety towards the financial market and increased interest in Canadian real estate. Strategies utilized by stock market-wary real estate consumers include allocating more funds towards a primary home purchase, investing in rental and vacation properties, and in the case of  baby boomers and older adults, reinvesting in real estate following the sale of their primary home, rather than cashing out and investing the proceeds into tumultuous financial markets



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 for any loss or damage resultant from any use of, reliance on or reference to the contents of this document.


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