Luxury home sales surge signals stronger market

Strong sales of luxury homes are setting the stage for a robust spring housing market in major Canadian centres, according to a report released Tuesday by Re/max Canada.

Most of the 10 major markets examined by the real estate brokerage experienced an increase in high-end sales over the first two months of the year, with more than two-thirds recording doubledigit gains over the same period in 2023.

“While figures remain off peak levels reported during (the COVID-19 pandemic), the upswing in luxury sales signals a return to overall health in the country’s major centres,” Re/max Canada president Christopher Alexander said in a press release.

The report found that almost all regions reported a stronger start to the year, despite a disconnect between buyers looking for deals and sellers’ price expectations.

Saskatoon, Montreal and Calgary lead the country with percentage increases of more than 50 per cent, the report said.

Luxury home sales also rose in Edmonton, Winnipeg, Halifax, Toronto and London, while only Ottawa saw a decline compared to year-ago levels.

With the end of quantitative tightening in sight, buyers have been reaping the benefits of softer housing values, Re/max said.

It said demand for luxury properties, including freehold and condominium properties, is being supported by lower overall values, strong equity gains and the expectation of declining interest rates.

A ripple effect is already underway, said Alexander, with stronger buying at lower price points pushing demand into the higher end.

“Equity continues to play a significant role in the marketplace, driving demand at the top end of the market,” he said.

The report also found younger buyers making up a bigger part of the mix. It said demand is coming from a mix of high-income professionals/executives, retirees, empty nesters, Gen X and millennials, newly landed immigrants, as well as large and multi-generational families.

Some luxury buyers looking to expand their purchasing power are moving into less-crowded markets such as London, Ont., Halifax, Calgary, Edmonton and Saskatoon, it said.

“Buyer enthusiasm is evident as the spring market ramps up,” Alexander said.

Meanwhile, it said activity among foreign buyers has fallen dramatically since the foreign buyer ban was introduced in January 2023 and extended to early 2027.

Re/max said its impact has been palpable in the uber-luxe segment of major markets, such as Metro Vancouver and Toronto, as well as the condominium market in Montreal.

A significant factor constraining the uptick of sales at luxury price points is the tax implications at the uberluxe levels, which have been weighing down the segment, particularly in the Greater Toronto Area, it said.

“Assuming a continuation of current economic fundamentals, momentum is set to climb at luxury price points from coast to coast,” Alexander said.