Unlike the luxury home market, the luxury condo market is beginning to see surging sales, as Baby Boomers begin to downsize and Millennials look to upgrade to more lavish condos.
According to a recent report by RE/MAX, the sale of luxury detached homes (priced from $1 million to $2 million) in Toronto and Vancouver fell 35 per cent when compared to the same time last year. Luxury single detached homes (priced $2-3 million range) were also down 50 per cent in Toronto, and 22 per cent in Vancouver. While detached homes were down, the luxury condo market saw a two per cent increase in sales in Toronto, while Vancouver saw a six per cent increase; this trend, according to the report, is largely driven by Baby Boomers and Millennials entering the luxury condo market. “Many Canadian Baby Boomers saw the strength of the real estate market over the past two years as an opportunity to cash-in, downsize and upgrade into the luxury market for retirement,” states Christopher Alexander, Executive VP of RE/MAX. “And most of them have put all their kids in school. They don’t need so much space anymore. Their single-detached home is worth a fortune and now they can buy a really nice luxury condo that is not as big in a really great urban area where they have access to a more urbanized lifestyle, more action.” Additionally, Millennials are also buying into the luxury condo market, and are taking advantage of family inheritances as well as properly managing their current wealth portfolio. “We’re also seeing an emerging trend of Millennials entering the lower end of the luxury condo market, as they tap into their inheritance to invest in this popular property segment.”
The foreign buyers tax also continues to affect the Canadian housing market, especially in the two hottest markets. “The foreign buyer’s tax has impacted overseas activity, opening more opportunities for local buyers to enter the luxury market,” Elton Ash, VP of Western Canada states. “As a result, local buyers are driving demand for luxury condos going into 2019, which is welcome news for developers in major city centres looking to build more properties.”
Concluding the report, both Toronto and Vancouver saw year-over-year increases for their most expensive condo units. In Toronto, the most expensive condo sold for $11.5 million in 2018, up 44 per cent (from $8 million) in 2017. In Vancouver, the most expensive condo sold for $11.7 million, up 34 per cent (from $8.7 million) from the year prior.