Top-Tier Real Estate: Spring 2023
State of Luxury Report*
Canada’s luxury real estate market saw muted sales activity in the first quarter of 2023, as a shortage of housing supply across every spectrum of the market compelled real estate sellers and buyers to delay market engagement to the second quarter. The country’s major metropolitan areas are primed to see a resurgence of newly pre-qualified and highly motivated home buyers across the luxury and conventional markets this spring, as those who paused their activity in 2022 renew their search, albeit with an empowered mindset that will deter significant price escalation. Despite buoyant consumer confidence and a level of demand that would typically prime the market for healthy activity, a deficit of property listings is expected to place a ceiling on potential spring sales, hampering the housing needs and aspirations of Canadians.
Our latest market report, Top-Tier Real Estate: Spring 2023 State of Luxury Report*, covers the performance of luxury residential real estate sales in Canada’s largest real estate markets during the first quarter of 2023.
“After an era of intense hyperinflation, new post-pandemic benchmarks for Canadian conventional and luxury real estate were established in 2022 as the market processed the impact of aggressive interest rate hikes and the effects of an increasingly uncertain global and domestic economic climate. By the end of the year, luxury housing segments in several major metropolitan areas were on the brink of buyers’ market conditions, while others had very clearly shifted into this territory,” says Don Kottick, President and CEO of Sotheby’s International Realty Canada. “The market is now on the verge of another important adjustment, this time in terms of pricing. It has taken several months for home sellers to realize the impact of the changing market on the market values of their properties. As new property listings come onto the market in 2023, their pricing will shift to meet current realities. This will start to unlock long-awaited opportunities for buyers and upsizers to purchase homes that meet their lifestyle needs as they acclimatize to the market.”
Record in-migration and a dynamic economy bolstered Calgary’s luxury market performance in the first quarter of 2023. Although $1 million-plus residential sales were down 36% from January 1– March 31 year-over-year, this sales volume was a significant 223% higher than levels recorded in the pre-pandemic first quarter of 2020 and more than the city’s 10-year average for sales over $1 million.
Montreal’s luxury market continued to rebalance, as residential sales over $1 million pulled back by 43% year-over-year in the first quarter of 2023.
A scarcity of luxury listings in the City of Toronto limited potential transactions and contributed to a 64% year-over-year decline in Greater Toronto Area residential sales over $4 million in the first quarter of the year.
In Vancouver’s inventory-starved market, first-quarter luxury sales activity over $4 million receded 53% year-over-year as prospective home buyers and sellers strategically deferred activity to spring.