Luxury home market sets new GTA sales record

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Luxury home sales in the Greater Toronto Area real estate market set a record for upper end sales priced at $1.5 million last year, with the demand for exquisite, expensive properties expected to continue in 2014.

That's according to the recent ReMax Upper-End Market Report that reported that sales were up 18 per cent over 2012 with 1,908 luxury properties selling in the GTA.  Hamilton-Burlington, Kitchener-Waterloo and London-St. Thomas also set new high-end sales records.

"It was a great year. Was it is a surprise? I think we knew that the market was performing well on a general basis," says Gurdiner Sandhu, Executive Vice President and Regional Director, Re/Max Ontario-Atlantic Canada. "The surprise piece of it is the percentage in the increase in the number of homes transacted. We thought it was healthy but didn't know to what degree. These significant gains at the top end demonstrate the overall strength of the market."

Mr. Sandhu says in the GTA, a luxury property can be defined as one worth $1.5 million or more. The C04 district, encompassing Toronto neighbourhoodsa such as Lawrence Park, Lytton Park, Ledbury Park and Cricket Club, reported the highest number of sales over $1.5 million in 2013, at close to 250 units. The Bridle Path, York Mills, Hogg's Hollow and Sunnybrook (C12) followed with nearly 200 sales recorded. Strength was also evident in communities outside the core, with Mississauga posting just over 100 upper-end sales over the last year.

Mr. Sandhu says Canada's upper-end market has undergone a major transformation in recent years, setting a new standard for luxury: "High-end homes are commanding top dollar in blue chip neighbourhoods from coast to coast.  Condominiums are hitting price points that rival single-detached homes. The market is maturing and the appetite is unprecedented."

He says buyers are seeking to indulge their vision for lavish lifestyles: "Purchasers are living out their wildest dreams about what should be in home including saunas, spas, serenity pools. They are limited only by their imagination and there are some homes out there that are just spectacular."

'Purchasers are living out their wildest dreams about what should be in home including saunas, spas, serenity pools. They are limited only by their imagination'
- Gurinder Sandhu
Executive Vice President and Regional Director,
Re/Max Ontario-Atlantic Canada

Mr. Sandhu says last year Canadian affluence was on the rise and homeowners have gained a substantial amount of equity in their homes in the last 15 years. "They have been taking that equity and moving up and that's why you saw a dramatic increase in the number of homes changing hands at the high end of the market."

That was particularly evident in Toronto. Local buyers, including professionals, entrepreneurs, and executives, represented the vast majority of GTA purchasers in 2013. Single-detached homes were in hottest demand. The most expensive property that changed hands was a 21,000 square-foot Bridle Path estate, styled after France's Palace of Versailles, that sold for $13.4 million plus.

There is also considerable interest from foreign buyers, says Mr. Sandhu. "There are still a significant amount of sales to immigrants, especially from the Middle East, Asia, Russia and India. But by and large in Toronto, it's local buyers."

More buyers were vying for fewer homes for sales, especially in the most prestigious and desirable neighbourhoods including Rosedale, Forest Hill, Lawrence Park, Bridle Path, Hogg's Hollow, and, to a lesser extent, west end neighbourhoods such as the Kingsway, Edenbridge, and Princess Anne Manor.

The luxury condo market was also strong in 2013.

"Luxury condos are rivalling single detached homes in sales and there is significant demand," says Mr. Sandhu. "People are willing to pay a premium for blue chip locations and amenities go a long way. A solid location and solid amenities are the priorities."

Despite concerns over the number of condominiums in the downtown core, demand for condos and townhomes remained constant in 2013. Last year, 92 condos priced at more than $1.5 million sold, up from 80 in 2012. Of those, 49 highrise units sold for more than $2 million, representing a 75 per cent increase over 2012. The most expensive condo, at 3,500 square feet and located in Yorkville, sold for $6.3 million plus. Yorkville is a hot spot for affluent empty nesters and retirees who are selling their large detached homes and want to live a luxury lifestyle in the central core.

Interest rates, which remain at historic low levels, helped fuel the drive to trade-up to high-end homes and the real estate market in general. Mr. Sandhu said other factors included a stellar performance in U.S. equities (a 30 per cent increase in 2013) that gave investors the opportunity to cash out and invest in bricks and mortar (real estate),  the improving economic conditions worldwide and in the Canadian economy, leading to greater consumer confidence.

"While Ontario is not as strong as the west, we do have a solid service industry and the local economy is driving up the luxury end of the market (in the GTA)," Mr. Sandhu notes.

As of early February 1,000 luxury properties (freehold) were listed for sale in the GTA, with just over 300 currently available in Toronto Proper. More than 50 were priced at $5 million plus. The highest-priced listing was a Bridle Path estate, available for $25.8 million, followed by a Forest Hill property listed at $18 million. There were close to 150 upscale condominiums listed for sale early in 2104.

With tight inventory, purchasers are also turning to infill homes that they can knock down to build their dream house on the lot. Buyers are paying top dollar for generous lots in prime locations. In fact, in neighbourhoods like Forest Hill and Lawrence Park, it is not unusual for a builder to purchase an older home on a 50 by 150-foot lot at $3 million, just to tear it down and build their large dream home. Renovation is also occurring at a breakneck pace in many areas.

Some 905 communities are also enjoying a flourishing luxury market. The Town of Oakville is one of the most desirable communities and has a long history of luxury sales. It set a new record for high-end home sales in 2013 with 156 properties priced at $1.5 million plus changing hands. The most expensive of those was a 1930s era home set on eight acres, including nearly 800 feet of waterfront, that sold for just under $10 million. The high-selling condominium was a luxury suite in downtown that sold for $2 million. In early February, there were just over 100 luxury properties listed for sale in Oakville, including a lakefront estate priced at nearly $16 million.  The priciest condo unit is listed for $6 million.

An influx of purchasers from the GTA plus local buyers helped push luxury sales to new records in Hamilton-Burlington with 436 properties priced at more than $750,000 changing hands (the price that denotes 'luxury' varies depending on market).  That was a 31 per cent increase over 2012. Most high-end sales occurred in the $800,000 to $899,999 category, accounting for about a third of top end activity.

Hamilton's affordability is a key draw where large lots in established neighbourhoods can be had at considerably less cost than Toronto, attracing value-conscious luxury buyers. Ancaster, Aldershot and Hamilton Mountain were most the popular neighbourhoods.

The highest-selling home in Hamilton-Burlington was a $1.6 million French-inspired bungalow on a large lot. Burlington also attracted affluent buyers with the average upper-end price being around $1.05 million. The most expensive sale was a $5.95 million waterfront estate on a double lot with views of the Toronto skyline.  There are approximately 120 luxury listings in Burlington currently and 100 in Hamilton.

While upscale condos are in demand, they are in short supply in the area. The top condo sale in 2013 was a Burlington waterfront suite that brought $1.36 million. Hamilton's priciest condo sale was $850,000 for a unit in Creekside in Dundas.

Demand for luxury product is unlikely to soften in the GTA 2014, with sales of homes priced over $1.5 million expected to maintain a healthy clip throughout the year.

"We think the fundamentals in the economy, consumer confidence and interest rates expected to remain low, will increase the strength in the luxury market and overall market in 2014," says Mr. Sandhu. "We are expecting it to be the same as 2013 or even a little higher. There will be a stability  in prices and perhaps increases. The increases will be more modest, but healthy."