Canada’s metropolitan luxury real estate markets are undergoing an unprecedented phase of evolution and expansion, according to Sotheby’s International Realty Canada. One year following the inception of the COVID-19 pandemic, the compounding effects of dramatic changes in the housing preferences of affluent Canadians, new demands across multiple generations of homeowners and buyers, significant cash accumulation, easy access to borrowing, and pent-up local and international demand, are rippling across the market.  With sales activity and price gains accelerating across major cities across the country as a result, strong performance is projected this spring.

The latest data compiled by Sotheby’s International Realty Canada reveal that the Greater Toronto Area (GTA) is poised to see strong gains in the coming months.  Residential real estate sales over $4 million spiked 157% year-over-year in the first two months of 2021; of these, five ultra-luxury properties sold over $10 million compared to one property sold in this price range during the same period of 2020.  During this time, luxury single family home sales over $4 million rose 203% year-over-year.   Meanwhile, the region’s luxury condominium market reflected resilience, and early March data reflects a segment poised to gain ground. While sales of luxury condominiums over $4 million were down year-over-year from six to two units in the first two months of 2021, March 1–15 sales were on par with previous year’s levels at one unit sold. Furthermore, sales in the first 15 days of March underscored the strength of the GTA’s $1 million-plus condo market sales, as sales increased 110% year-over-year.

Vancouver’s luxury market gained significant momentum leading into spring as residential real estate sales over $4 million increased 41% year-over-year in the first two months of 2021. One property sold over $10 million during this period, where none had sold in this price range in the same months of 2020. Single family home sales over $4 million increased 29%, with one ultra-luxury home sold over $10 million. Confidence and activity also rebounded in the luxury condominium market, as sales over $4 million increased 75% to seven units sold in January and February. Residential real estate sales over $4 million between March 1–15 suggest steep gains to come in the spring, as sales soared 175% to 11 properties sold, with one of these above $10 million.

The first two months of the year also saw strengthening high-end residential real estate sales in metropolitan areas where the price threshold for luxury real estate is more accessible.  In Montreal, sales over $1 million rose 27% year-over-year, with two properties selling over $4 million compared to three sold in this price range in the first two months of 2020. Of these, one ultra-luxury property sold over $10 million where there had been no transactions in this price range at the same time last year.  Sales in the city’s $1 million-plus single family market increased 30% year-over-year, while condominium sales over $1 million remained stable from 2020’s highs in the first two months of 2021, with a nominal 4% year-over-year contraction. However, one of these condominium sale was of a penthouse condominium by Sotheby’s International Realty Quebec, which set a historic record for the province.  Residential real estate sales over $1 million in the first 15 days of March also indicate an active spring ahead, as sales climbed 93% year-over-year.

Calgary’s luxury residential real estate market also emerged from previously entrenched buyers’ market conditions. Residential sales over $1 million more than doubled at a rate of 119% year-over-year in the first two months of 2021, as the market-dominant single family home segment saw sales increase 125%. However, excess supply and soft demand continued to weigh on the city’s luxury condominium market which saw one condominium sold over $1 million in the first two months of 2021.

“Canada’s luxury real estate market is undergoing a dramatic transformation as a result of the pandemic. Many of these changes will not only inspire spring sales activity but have long-lasting impact on real estate demand in our country,” says Don Kottick, President and CEO of Sotheby’s International Realty Canada. “As a company, we are seeing foundational changes in the home and lifestyle preferences across every generation of Canadian, and a level of willingness to invest in home buying and renovation that will permanently improve the quality of housing stock, and therefore prices. We are forecasting multiple waves of consumers in the coming months, both local and international, who have a desire for Canadian real estate ownership that has never been stronger. Most importantly, these potential buyers have unprecedented access to cash and low-cost borrowing that will enable them to engage in the market in months to come.”

According to Kottick, Canada’s metropolitan luxury real estate market is primed for healthy spring performance, and in most markets, the ceiling for sales activity will be capped by lack of inventory rather than consumer demand.

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Key Influences

Home Renovations Bolster Luxury Price Gains
Canadian home renovation activity, which is forecast to rebound to $80 billion in 2021 following a scant pullback of 5.2% from 2019 levels last year according to a recent Altus Group Housing Report, is supporting short- and long- term price gains across the country’s major metropolitan real estate markets. While research released in Sotheby’s International Realty’s global 2021 Luxury Outlook revealed that luxury buyers typically prefer turnkey properties that are move-in ready and require no renovations, the pandemic has also driven high-end homeowners to enhance their living spaces with discretionary renovations to enrich their lifestyle and enable work, entertainment and socializing. Common luxury home renovations have included the enhancement of outdoor space with gardens and landscaping, patio and deck upgrades, outdoor kitchens and dining areas, outdoor theatres, waterfront docks, and personal sports facilities such as pools and ball courts and children’s play amenities. Interior renovations have included kitchen upgrades, reconfiguration of space to accommodate home offices, and the addition of theatres, personal fitness and wellness facilities.

Lack of luxury real estate inventory in Toronto, Montreal and Vancouver is amplifying this renovation trend. According to Sotheby’s International Realty Canada experts, prospective homebuyers are now more likely to be willing to purchase properties that require repairs and updates due to a lack of other options in their desired neighbourhoods. Others are purchasing luxurious move-in ready properties and renovating to meet bespoke personal preferences. While this renovation trend is largely driven by end-users, market confidence is also motivating investment-minded buyers to purchase homes for renovation in anticipation of future resale at a higher price.

With renovations elevating the overall quality of housing stock in these metropolitan areas, the short and long-term market value of luxury housing across Canada’s major real estate markets is expected to rise through the spring and in the long term.

Multi-Generational Influences on Luxury Single Family Home Market
Across multiple generations of homeowners and homebuyers, dramatic changes in housing and lifestyle preferences are heightening demand and simultaneously reducing single-family housing supply on the resale market.

Released in early March 2020 prior to the pandemic, Mustel Group and Sotheby’s International Realty Canada’s “Generational Real Estate Trends Report: Aging in Place” revealed that while 86% of baby boomers/older adult homeowners in Canada’s key metropolitan areas wanted to live in their current home for as long as possible, 36% were likely to sell their current home and move to a new primary residence within their lifetime. According to survey results, 54% of those with plans to sell their current home and move to a different primary residence expected to move into a condominium, 29% expected to move into a single-family home while 18% anticipated moving into an attached or duplex/triplex unit.

Due to public health concerns following the start of the pandemic, the preferences of this influential generation have evolved. According to Sotheby’s International Realty Canada experts, baby boomers/older adult homeowners are accelerating plans to achieve their ideal primary residence and are now more likely to opt for a personal single-family home for this purpose. Some are re-evaluating the benefits and perceived risks of higher density housing and their common amenities and facilities. While some baby boomers/older adults are relocating to outlying suburban or recreational regions to achieve more space, others who already own single family homes in their desired neighbourhoods are choosing to renovate with the intent of living there for as long as possible given the current shortage of housing options available for sale.

This increased desire to “age in place” is expected to constrict supply at a time when demand for single-family homes from Millennial homebuyers is at an all-time high given new pandemic preferences. According to a pre-pandemic 2018 survey by Mustel Group and Sotheby’s International Realty Canada, 83% of “modern family” homeowners aged 20 – 45 in Canada’s key metropolitan areas would prefer living in a detached single-family home, even though just over half (56%) had actually purchased one. With the pandemic, the preference for single-family home living amongst young families has soared as the need to accommodate working and studying at home, as well as preference for home recreational and entertainment space increased.

According to Sotheby’s International Realty Canada experts, the pandemic has not only increased demand for single-family homes amongst young families, it has created demand across the full spectrum of young first-time homebuyers regardless of family stage, who may previously have opted for a condominium but are now seeking a single-family home instead. Motivated by a “fear of missing out” on single-family home ownership, affluent young buyers are being enabled by low mortgage rates, newfound prioritization of homeownership over discretionary lifestyle expenses already reduced by pandemic restrictions, and most notably, the accelerated generational transfer of an estimated $1 trillion in personal wealth from Canadian baby boomers to their children since the pandemic.

Given changing preferences across multiple generations of home buyers and homeowners, limited supply and elevated demand will bolster prices and activity across Canada’s largest single-family home markets this spring and into the foreseeable future.

Urban Luxury Condominium Demand Resurges in Toronto, Vancouver, Montreal
Luxury condominium sales tapered across Canada’s metropolitan housing markets in 2020 following the pandemic’s inception, as real estate consumer sought more space through urban, suburban and recreational single-family homes purchases.

Preliminary 2021 data and market insight from Sotheby’s International Realty Canada experts reveal that this softening was transitory. Luxury condominium sales activity is experiencing a significant renewal, with multiple offers and brisk sales the new norm for Toronto and Vancouver. Montreal’s high-end condominium market also balanced in the first two months of the year, as sales over $1 million rebounded to 2020’s record highs, while Sotheby’s International Realty Quebec’s sale of a penthouse condominium at The Ritz-Carlton Residences in Montreal set a new record as the highest-priced condominium sale through the MLS® (Multiple Listing Service) system in Quebec’s history.

With the prospect of widespread vaccine availability in Canada this year, local consumer demand and both Canadian and international investor confidence in the luxury condominium market is rebounding.  Depleted inventory and steep price gains in metropolitan single-family home markets is also pressing homebuyers to purchase large condominiums out of necessity and a sheer lack of alternatives. Furthermore, a “second wave” of real estate buying is taking place in metropolitan luxury condominium markets as those who moved further afield during the pandemic are now returning to buy condominiums as secondary homes, pied-à-terres and investment properties within city centres. This revitalized consumer demand and confidence positions the Toronto, Vancouver, Montreal condominium luxury condominium markets for steady gains through the spring.

Pent-up Cash, Financial Market Turbulence to Stimulate Luxury Demand
The significant accumulation of cash by mid- and high-income Canadian households during the pandemic is poised for release into the economy as a whole, and the real estate market specifically in the spring and summer of 2021, reinforcing continued demand. According to a report released by CIBC in November 2020, COVID-19 triggered the largest cash accumulation of cash in recorded history, with households and businesses holding over $170 billion in excess cash, the majority of which is in the accounts of mid-and high-earning households. With low interest rates discouraging cash accumulation, CIBC has predicted the deployment of cash in the spring and summer of 2021 through consumer spending, financial investment, real estate and intergenerational wealth transfer.

At the same time, according to Sotheby’s International Realty Canada experts, significant and ongoing volatility in major stock indices in 2020 on the heels of a decade-long bull-market has propelled affluent real estate consumers to purchase real estate to diversify asset portfolios, hedge against inflation, buffer against stock market uncertainty and leverage historically low mortgage lending rates. For the past few years, affluent real estate consumers have been investing more into primary home purchases, buying multiple properties for vacation and investment, upsizing their real estate choices, and in the case of baby boomers and older adults, reinvesting proceeds from home sales into a new property for themselves or their children rather than exiting the housing market. These trends have only been magnified through the course of the pandemic, with the outflow of pent-up cash reserves to ignite new buying activity in the coming months.

Global Flight of Human and Financial Capital to Canadian Real Estate
Restrictions on global travel limited international purchasers of Canadian real estate in 2020. However, an upswing in the volume of international enquiries on luxury property listings in Toronto, Montreal and Vancouver in the preliminary months of 2021 reveal that underlying demand has not dissipated and is set to resurge in the seasons ahead.

Canada aims to welcome 401,000 new permanent residents in 2021 the majority of which will be absorbed into the country’s major metropolitan areas of Montreal, Toronto and Vancouver, introducing new demand for conventional and high-end housing into these markets.

In addition to the influx of permanent residents and new immigrants, Canada will be the beneficiary of the repatriation of wealth to Canada from citizens currently living abroad who are seeking the comparable security of investment into the Canadian lifestyle and the country’s real estate. According to a 2010 report by the Asia Pacific Foundation of Canada and the Canadian Expat Association, 2.8 million Canadian citizens were living abroad, with the greatest number in the United States, and with regions such as Hong Kong, France and the UK amongst the leading destinations for Canadian living abroad. Since the start of the pandemic, Sotheby’s International Realty Canada has noted a marked increase in luxury real estate purchases by such Canadians seeking a path to return, or a secondary residence to enjoy.

Furthermore, as an international beacon representing stability, security and safety, Canadian real estate continues to be well-positioned as a destination for foreign investment and asset diversification for high and ultra-high net worth investors worldwide.

Although the pandemic has seen international buyers purchasing luxury Canadian properties either entirely virtually, or in some cases, sight unseen, many are also awaiting the reopening of borders to enable tangible visits to view and buy properties. The imminent release of this pent-up international demand is set to spur additional sales activity across the conventional and luxury markets in the country’s major metropolitan areas this spring.




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 neighbourhoods 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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