LUXURY HOME SALES SKYROCKET
Demand in Montreal `unheard of'
When the first lockdowns of the pandemic were announced, economists predicted Canadian real estate markets would suffer. In early 2020, it looked as though sales would slow and prices would fall. But then, the opposite happened.
A report released Monday by Sotheby's International Realty Canada on luxury sales of homes valued at over $1 million in Vancouver, Calgary, Toronto and Montreal found that sales at this price point experienced triple-digit growth across all markets in the first half of this year.
Sotheby's International Realty Canada CEO and president Don Kottick said that, in Montreal, 30 per cent of properties that sold at over $1 million did so above list price in the first half of 2021 — “unheard of ” in the Montreal market.
“We haven't seen something like this before,” Kottick said.
Between January and June, there were 990 home sales over $1 million in Montreal, an increase of 112 per cent from the corresponding period in 2020. Most were under $2 million, but sales were up at higher price points as well. There were 169 properties sold between $2 million and $4 million (a 138-per-cent increase), and 14 properties sold for more than $4 million (compared to only six the year before).
After a brief lull, luxury condo sales have rebounded too. Realtors sold 188 units between $1 million and $2 million in the first six months of this year, an increase in sales of 109 per cent over last year. There were also 21 units sold between $2 million and $4 million (compared to 12 in 2020).
Ultra-luxury sales are rare in Montreal, but in January of this year there was also a record-breaking $11-million condominium sale at the Ritz-carlton — the most expensive sale of a condo in Quebec ever recorded on Centris.
“We've noticed an uptick in the demand in the luxury, and even the ultra-luxury, condo space,” Kottick said. “I think it all comes back to Montreal being a global destination. The fact that there's a lack of detached single-family homes has probably helped the condo market as well.”
According to the report, factors driving the demand for luxury property include low interest rates, the growth of work-fromhome opportunities, and pandemic-driven lifestyle changes that have made people crave more space.
But it isn't just luxury property that are hot. Bidding wars have become much more common at all price points. According to the Quebec Professional Association of Real Estate Brokers (QPAREB), more than half of the homes sold in June in Greater Montreal were purchased for more than the asking price. The median price of a single-family home in Greater Montreal is now $508,000, a 29-per-cent increase over a year ago.
Kottick said there are two major sources of wealth fuelling the real estate market: personal savings from high-income families who stuffed their piggy banks full during lockdown, and intergenerational wealth transfer from baby boomers to their kids.
The Bank of Canada has estimated Canadians saved an additional $180 billion during the pandemic, mostly by high-income and upper-income households. While much of this wealth is currently just sitting in bank accounts, some of these savings are probably earmarked for real estate purchases.
At the same time, the baby boomer generation is beginning to loosen the purse strings to pass on some of the wealth they have accumulated to their heirs. In 2018, the Toronto-based research firm Strategic Insight projected that approximately $1 trillion in personal wealth would be transferred from one generation to the next in Canada between 2016 and 2026.
Money is also flowing into Quebec from other provinces, and Kottick predicted that foreign investment will once again become a notable source of investment in the luxury real estate market once immigration opens up again.
“Montreal is positioned as a global destination,” Kottick said. “It's affordable, relative to other cities, and people just see it's a place where `I want to live.' I think it's become much more attractive not only to people in other provinces, but internationally as well.”