Something interesting happened during the coronavirus pandemic. Many Canadian housing markets are reporting an average sales price of more than $1 million, even if the homes themselves do not look like something you’d typically expect in the luxury home market.

Is it time to update the term “luxury real estate”? Perhaps. But the trend also spotlights how hot the Canadian housing market has become – especially when many detached, attached and condominium properties are topping $1 million, from Toronto to Victoria to Halifax.

That being said, there has been considerable demand for luxury real estate in Canada. But what were the numbers like last year, and is this strength likely to continue in 2022?

Canada’s Luxury Home Market is Skyrocketing!

While it can be challenging to track luxury real estate data, some reports can be extremely helpful in defining the state of Canada’s luxury home market.

The RE/MAX 2022 Luxury Market Report confirmed that 18 of the 19 markets analyzed enjoyed double- and even triple-digit percentage gains in home prices. Sales activity was just as sizzling, too.

For markets that saw homes sell for more than $1 million, here is a look at the cities making the top five list on a year-over-year basis (outside Toronto and Vancouver, of course):

• Saint John: +1,400% to 15 units
• Moncton, New Brunswick: +600% to seven units
• Barrie, Ontario: +517.8% to 278 units
• London, Ontario: +255.1% to 561 units
• Kitchener-Waterloo, Ontario: +208% to 1,312 units

The country’s largest luxury markets also recorded significant gains. The Greater Toronto Area reported a 112.8-per-cent jump in sales of homes worth more than $3 million. Metro Vancouver saw a 75.8-per-cent increase. In the GTA and Vancouver, transactions of homes with a price point of $10 million saw a spike of 156 per cent and 167 per cent, respectively.

The only market to see a drop in unit sales of properties worth more than $1 million was Charlottetown, Prince Edward Island, which recorded a 42.9-per-cent decline.

“The currency of home ownership has clearly taken on a new dimension in 2021,” said Christopher Alexander, President of RE/MAX Canada, in a news release. “Canadians are moving to secure their future. The pandemic fuelled a run on real estate that has encompassed every segment of the market, and the value of housing has increased exponentially as a result – not only as a form of shelter but a desirable asset class that provides an attractive return on investment.”

Are investors driving this part of the market? The Bank of Canada (BoC) recently published a report that noted as home sales ballooned and prices soared, it was purchases by investors that grew the most. With thousands of high-end units being sold nationwide, it is safe to say that investors are also eating up the luxury home market, which is also experiencing low supply of listings.

“More so than ever before, it appears that buying a home is a retirement strategy, which many people believe will help the next generation achieve home ownership,” said Elton Ash, Executive Vice President of RE/MAX Canada, in a statement.

Luxury Trends Seeping into Broader Housing Market

The RE/MAX report revealed several other trends, some of which show that the effects of the luxury real estate boom are seeping into the broader housing industry. For example, luxury home-buying activity has spilled into the smaller markets where prospective homeowners can enjoy greater purchasing power. Or, as another instance, home sales and buyer competition are contributing to higher price points across Canada.

And the supply of luxury homes could decline in the coming months. It was reported that sales of building lots at the top end of the luxury market slipped because buyers are apprehensive about construction amid labour shortages, supply chain woes and unclear costs.

Will a million-dollar luxury property advance even more over the next year? Although interest rates are expected to climb in the coming months, borrowing costs are still near historic lows. So, homebuyers can continue to enjoy more purchasing power, even for these types of homes, be it in Metro Vancouver or Halifax-Dartmouth.

Will Canada Become a Luxury Market?

Will Canada itself turn into a luxury home market in the next year or two?

According to the Canadian Real Estate Association (CREA), the average house price climbed to an all-time high of $816,720 in February, up 20 per cent from the previous year. The only way to reverse this trend will be supply, says CREA’s chief economist Shaun Cathcart.

“The ideal situation between now and the summer would be that a huge surge of sellers come forward looking to sell,” Cathcart stated in a news release.

But will this be enough to curb the affordability crisis and monumental surge? Analysts, economists, and public policymakers will keep monitoring the monthly CREA data.

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