Luxury home sales surge in Canada

'The million-dollar home no longer holds the same cachet'

Garry Marr, The Ottawa Citizen, September 6, 2007

Luxury home sales across the country have been "unprecedented" over the first seven months of this year, according to one of the country's largest real estate firms. 

Re/Max says it studied luxury home sales in 16 markets in Canada and found sales activity rising anywhere from 13 per cent to 521 per cent.  The strong market for luxury property echoes what is going on in the overall resale market, which is on pace for a record year, according to the Canadian Real Estate Association.

"The consumer demand for luxury property has been insatiable," says Michael Polzler, executive vice-president of Re/Max Ontario-Atlantic Canada.  "Unabated demand throughout the year has created tight market conditions in a number of blue chip neighbourhoods.  Limited availability of product has, in turn, placed mounting pressure on housing sales."

Re/Max says the strong demand has put so much pressure on prices that $1 million is just a starting price in some markets for a luxury home.

"The million-dollar home no longer holds the same cachet it once did," says Mr. Polzler.  For the purposes of its survey, Re/Max listed all homes that sold for $1.5 million or more in the greater Toronto area as luxury.  In Vancouver, luxury homes start at $2 million.  In Ottawa, where a luxuyry house was defined as costing $750,000 or more, there were 99 sales in the first seven months of this year, compared to 46 in the same period last year.

The price of a luxury home is also creeping up out West, with Re/Max pegging the starting price at $1 million in Calgary and $900,000 in Edmonton.

Western Canada also has some of the hottest sales markets in the country.  Edmonton had 311 luxury homes sell over the first seven months of the year, a 521-per-cent increase from a year ago.

Booming Saskatchewan, which has boasted some of the highest percentage price increases in Canada over the past year, also has a red-hot luxury market.

Re/Max says you now need $500,000 to buy a luxury home in Regina or Saskatoon.  Regina luxury sales are up 450 per cent through the first seven months of 2007 compared to a year ago.  Saskatoon sales are up 328 per cent during the same period. 

"Strong economic performance, especially in Western Canadian provinces, has bolstered consumer confidence levels to such a degree that purchaser in the upper end are comfortable with a million-dollar-plus investment in real estate," says Elton Ash, regional executive vice-resident of Re/Max of Western Canada. 

Re/Max says strong markets have helped create wealth and have driven the real estate market.  The realtor also credits the growing trend of inheritance as being a key factor, estimating Canadians stand poised to collect $1 trillion in the coming years.

       THE STARTING LINE

FINANCIAL POST