GTA luxury real estate market stabilizes

In many ways, the three-storey, four-plus-one bedroom, six-bathroom brick home at 97 Strathallan Blvd. in Toronto’s prime Lytton Park, which is listed for sale at $4.995-million, represents what’s going on in a stabilizing Greater Toronto Area (GTA) luxury real estate market, says Janice Fox, broker of record, Hazelton Real Estate, sales representatives for the home.

“We put Strathallan on the market at the beginning of summer,” she says. “We priced it well. I really thought that we had it sold over the summer, because this particular house has a very interesting main floor and backyard.”

There wasn’t anything wrong with the marketing or pricing, Fox says. The market was just stagnant. Calls however are starting to pick up on the property as the luxury market slowly begins to turn as well. Fox says she started to notice a market change around early to mid-October.

“Two weeks ago, I probably would have had a little bit of a different answer than I do today, because it’s just anecdotal,” she says.

“I don’t think there’s enough data to say statistically that things are turning, but in the past two weeks it definitely feels like things are picking up. People are starting to call. There are more sales, there’s less question about the future. Some of that malaise is gone. In the past few weeks, we’ve seen a good number of sales over the $7-million mark, and healthier sales for homes over the $4-million mark.”

The market turn isn’t an interest rate story, she adds. The decrease in interest rates has more of an impact on people who want trade up into the luxury echelon, selling a home in the $1-million to $4-million range.

A greater focus for luxury buyers is the new norm of more amenities, such as backyard oases, big-screen movie rooms, fitness facilities, spacious entertainment areas and home offices.

Knowing that, a marketing focus for Fox at Strathallan has been on the garage converted into an open-sided cabana, offering extended living space with a large TV, a fireplace and two-piece bathroom. There’s a built-in barbecue area and a plunge pool with body jets.

Cailey Heaps, president and chief executive officer, and broker of record for Heaps Estrin Real Estate Team, also says the luxury market, which she says includes homes priced over $7- million, is picking up after a slow start to the year, mainly due to the updated municipal land transfer tax that came into effect in January 2024, which increased the tax for homes purchased over $3-million.

“Interestingly, I came across an article recently that stated the average price for Toronto’s luxury properties has increased by about 3.9 per cent year-over-year despite a slight decrease in sales activity,” she says.

“This is compared to Vancouver and Montreal, which posted slight declines of 1.8 per cent and 2.8 per cent. Of note, there were 27 sales in the Central Toronto districts over $7-million from Jan. 1, 2024, to Sept. 1, 2024, and interestingly, there have been eight sales from Sept. 1 to Oct. 22. This demonstrates the positive shift in the luxury market.

“In my opinion, the trend is being driven by renewed consumer confidence, where luxury buyers are optimistic about longer-term appreciation coupled with more favourable interest rates,” she says.

Heaps says that looking ahead to winter, she expects to see a “livelier market.”

According to Sotheby’s just-released top-tier fall forecast real estate market report, residential sales over $4-million in the GTA saw a three per cent year-over-year uptick in July and August, while September sales were up nine per cent compared to September 2023.

“Luxury home buyers are typically more shielded from fluctuations in interest rates due to their significant cash reserves and strong financial standing, which means that they rely far less frequently on mortgages,” says Don Kottick, president and chief executive officer of Sotheby’s International Realty Canada.

“That said, interest rate shifts do influence the mindset of luxury consumers, and rate cuts over the past several months improved confidence and pretransactional activity by the end of the third quarter of 2024. We expect any further cuts to encourage activity across the luxury and conventional housing market.”

With an increase in top-tier property listings, declining interest rates and stabilizing or decreasing housing prices, especially in previously hyper-competitive markets such as Toronto and Vancouver, Kottick says conditions are the most favourable for buying a home since 2017.

“In particular, the luxury condominium market offers abundant inventory and favourable opportunities for investment-minded buyers right now,” he says. “As population gains continue and as interest rates decline over time, new demand will be created and competition will eventually increase. This makes the current market an ideal time for those looking to purchase or upgrade in traditionally competitive areas to do so.”

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