2017 Spring Market Outlook | Steven Hill Luxury Realtor for Sotheby's International Realty Canada

Toronto positioned for greatest gains, Vancouver expected to normalize, healthy gains are forecast in Montreal, and cautious optimism is found in Calgary, says Sotheby’s International Realty Canada.

Sotheby’s International Realty Canada is forecasting that Canada’s market for residential real estate over $1 million will be led by the Greater Toronto Area (GTA) in the spring of 2017, with sales volume, velocity and pricing of the $4 million luxury segment projected to surpass previous years’ record-breaking performance. Vancouver’s $1 million-plus real estate market is anticipated to normalize in the coming months, while cautious optimism returns in Calgary. Montreal’s market for real estate over $1 million is expected to continue its course of modest, healthy growth.

Data compiled by Sotheby’s International Realty Canada in the country’s four largest real estate markets foreshadow spring performance in 2017. The GTA experienced the greatest year-over-year gains in sales over $1 million (condominiums, attached and single family homes). In January and February 2017, sales volume increased 87% across the region, while sales in the city of Toronto rose 44%. During this time, sales of luxury real estate over $4 million soared 144% and 147% in the GTA and the city of Toronto respectively. In Montreal, $1 million-plus real estate sales increased 13% in the first two months of 2017 compared to the year prior, while Calgary’s remained on par with 2017 levels. Vancouver sales over $1 million fell from historic highs by 45% year-over-year during this time as sales over $4 million contracted 68%.

Canada’s top-tier real estate market continues to face unprecedented levels of uncertainty in spring 2017, absorbing the impact of previously introduced government policy, responding to shifting signals on potential new regulation, and moving with forceful geo-political headwinds on a continental and global scale. In spite of these macro-influencers, local market factors such as inventory levels, regional economic and job indicators, consumer confidence and hyper-local demand will continue to be the predominant forces influencing top-tier market performance in spring 2017.

“The Toronto real estate market has pulled into a league of its own, and we expect to see all-star performances across every luxury segment – single family and attached homes, as well as unprecedented performance in the luxury condominium market,” said Brad Henderson, President and CEO of Sotheby’s International Realty Canada. “At the same time, rising Canadian consumer optimism will add positive colour to the markets in Vancouver, Calgary and Montreal in the coming months.”

Key National Influencers:

  • The Canadian economy surpassed expectations in the last three months of 2016 with an annualized gain of 2.6% compared to earlier projections of a 2.0% according to the Conference Board of Canada. This sets a strong foundation for healthy growth and more robust consumer, business and top-tier real estate market confidence leading into 2017. The Board’s Index of Consumer Confidence rose 9.0 points in February 2017 to 110.6 – the highest level in more than seven years. Quebec and Ontario saw the most significant improvements in consumer confidence, with the two provinces benefiting from the bulk of full-time positions created by the Canadian economy in recent months. Consumer confidence also rose in Alberta, with the index rising 8.2 points to 67.5, its highest level since March 2015. British Columbia’s index rose 2.3 points in February to 126.4.
  • The falling national unemployment rate serves as a positive indicator for several major real estate markets. The national unemployment rate fell to 6.6% in February 2017, its lowest level in over two years. Vancouver’s unemployment rate dropped to 4.7% compared to 6.0% in February 2016, posting the lowest rates of Canada’s largest cities and contributing to local market confidence for the spring. While Toronto’s rate of 6.8% remained consistent with February 2016 levels, Montreal’s below-national-average unemployment rate of 5.5% is anticipated to have a positive influence on conventional and high-end market demand. Calgary’s unemployment rate of 9.2%, up from 8.5% in the same month last year, poses a risk to newly emerging optimism within the top-tier real estate market.
  • The low Canadian dollar, which has hovered at 74 cents to the US through March 2017, positions Canadian real estate as a favourable investment for American and international buyers. This is encouraged by the growing gap between Canadian and US monetary policy and the countries’ interest rates. While the Bank of Canada maintained its overnight rate target at a historic low of 0.5% in March 2017, the US Federal Reserve raised its benchmark interest rates to a target range of 0.75% to 1% on March 15 to reflect a strengthening American economy. Along with other repercussions, the Federal Reserve’s latest increase continues to reinforce the value of the US currency.
  • Recently introduced municipal, provincial and federal policy changes impacting real estate remain wild cards in the top-tier market this spring 2017. The combination of tighter mortgage rules and regulations at a national level, a 15% property transfer tax on foreign nationals and foreign-controlled corporations buying Metro Vancouver real estate, and recent property transfer tax amendments in Ontario will have cascading effects, with a more complete picture to be revealed in coming months.


Cautious optimism has returned to the city of Calgary’s top-tier real estate market as sales activity stabilized leading into spring 2017. Sales over $1 million (condominiums, attached and single family homes) experienced 19% gains in 2016 over 2015, and early 2017 data indicates that this ground will maintain into the spring. As inventory contracted, 64 properties sold over $1 million during the first two months of 2017, unchanged from the same period in 2016.

Of these transactions, 57 single family homes sold over $1 million, up a marginal 2% over the same period in 2017. Two condominiums sold over $1 million in the first two months of 2017 compared to one in 2016.

Stabilizing consumer confidence, however, remains fragile. The city’s real estate market remains vulnerable to continued uncertainty in the oil and gas sector, elevated unemployment rates, wage uncertainty and net population outflow. The potential risk for new spring listings inventory to overtake demand also exists. With a buyers’ market still entrenched in Calgary, and with conventional and top-tier market indicators still weak, sellers are cautioned to price and market strategically for current conditions through the course of the spring.


Vancouver’s top-tier real estate market is expected to normalize this spring, following an action packed 2016 that saw sales over $1 million hold steady at a nominal 1% year-over-year decrease from record highs as the $4 million plus market posted 34% gains in spite of multi-pronged policy introductions aimed at cooling the market.

Slackening sales at the start of 2017 signal a pending return to more moderate levels of market activity: residential real estate sales over $1 million declined 45% year-over-year to 531 units sold in January and February 2017, while sales over $4 million decreased 68% to 43 units compared to 133 units sold in the same period in 2016.

Single family home sales over $1 million fell 56% to 296 units sold in the first two months of 2017 compared to the same period in 2016. During this time, luxury home sales over $4 million stalled as real estate consumers hesitated and price expectations diverged between prospective buyers and sellers. Luxury single family homes over $4 million decreased 71% year-over-year to 35 units sold in January and February 2017 compared to 120 units sold during the same months of 2016.

Demand for top-tier condominiums continue to reflect greater resilience than the market for single family homes. Buoyed by favourable demographic trends, downsizing baby boomers and millennial first-time homebuyers are boosting demand as they seek alternatives to detached homes. Condominium sales over $1 million in January and February 2017 decreased 28% year-over-year to 142 units sold, with five sales over $4 million reflecting a 55% decline from the same months the previous year. Persistent bidding wars within the top-tier condominium market suggest healthy demand in spring 2017.

In spite of imminent real estate market adjustments, Vancouver has boasted Canada’s fastest growing metropolitan area economy for two straight years, and economic authorities have projected that the city will maintain this leading position into 2017 with a 2.8% expansion of the economy. Continued net migration, the lowest unemployment rate of Canada’s largest cities and low vacancy rates will continue to sustain long term housing demand and consumer confidence in Vancouver’s top-tier real estate market in the longer term.

Greater Toronto Area (GTA):

Soaring activity in the first two months of the year foreshadow new heights for the Greater Toronto Area’s top-tier real estate market this spring. In January and February 2017, the GTA (Durham, Halton, Peel, Toronto and York) market continued its record-setting sales streak, posting the strongest year-over-year gains of Canada’s four major metropolitan markets for the period. Real estate sales over $1 million (condominiums, attached and single family homes) increased 87% to 3,043 properties sold, while luxury sales over $4 million increased 144% year-over-year to 66 units sold. During this time, sales over $1 million and $4 million in the city of Toronto increased 44% and 147% year-over-year, to 943 and 42 properties sold.

These gains follow a year in which GTA sales over $1 million and $4 million surged 77% and 95% in 2016 over 2015, while $1 million-plus and $4 million-plus sales in the city of Toronto increased 44% and 87% year-over-year.

Exceptional performance is anticipated for the high-end condominium market in spring 2017. Shifts in demographics, strong consumer and investor confidence, and comparative affordability in face of escalating single family home prices has propelled steep gains in demand resulting in heated bidding wars, and robust sales. Across the GTA, early 2017 condo sales volume over $1 million exceeded 2016 levels by 104% with 167 units sold. Within the city of Toronto sales of condos over $1 million rose 85% year-over-year to 135 units. Four condos sold over $4 million during this time, all within the city of Toronto, up 33% compared to the first two months of 2016.

The $1 million-plus market for single family homes is projected to sustain heated growth this spring. In the first two months of 2017, the segment experienced 86% year-over-year gains in sales volume within the GTA and 38% gains in sales volume in the city of Toronto to 2,876 and 808 units respectively. The $4 million-plus luxury home segment is expected to surpass previous gains: in the first two months of 2017, sales volume rose 158% year-over-year to 62 units sold in the GTA, and 171% to 38 units sold in the city of Toronto.


Healthy gains are forecast for the $1 million-plus real estate market in Montreal for spring 2017, following modest year-over-year gains in sales volume in the first two months of the year. In January and February 2017, real estate sales over $1 million increased 13% over the same months in 2016 to 88 properties (condominiums, attached and single family homes) sold. While single family home sales rose 10% year-over-year to 76 properties sold, condominium sales over $1 million rose 33% to 12 properties sold.

Top-tier single family home sales are expected to see steady gains in sales volume and velocity from 2016 levels. The addition of new condominium inventory to the market with the recent completion of several new developments is projected to moderate prices, even as projected consumer demand is forecast to absorb additional supply.

Continued growth in Quebec’s provincial economy, buoyant consumer optimism and enduring political stability are set to sustain positive market conditions for top-tier real estate through the spring.

Disclaimer* The information contained in this report references market data from MLS boards across Canada. Sotheby’s International Realty Canada cautions that MLS market data can be useful in establishing trends over time, but does not indicate actual prices in widely divergent neighborhoods or account for price differentials within local markets. This report is published for general information only and not to be relied upon in any way. Although high standards have been used in the preparation of the information and analysis presented in this report, no responsibility or liability whatsoever can be accepted by Sotheby’s International Realty Canada or Sotheby’s International Realty Affiliates for any loss or damage resultant from any use of, reliance on, or reference to the contents of this document.


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