Sotheby’s 2018 Year End Top Tier Real Estate Report

Sotheby’s 2018 Year End Top Tier Real Estate Report

Sotheby’s International Realty Canada released their Top Tier Real Estate Report for end of 2018. Here's what they had to say about GTA market:

Despite transient market disruptions in the months following the April 2017 implementation of the Ontario Fair Housing Plan, and again in the first quarter of 2018 with the introduction of tighter mortgage lending rules, the GTA’s top-tier real estate market posted modest gains by the end of 2018. Market progress is not reflected in year-over-year comparisons of 2018 and 2017 sales figures, which incorporate contrasts between uncharacteristically soft sales in the first quarter of 2018, and record-setting performance in the first quarter of 2017. Instead, recent trends are better reflected in the market trajectory of the last half of 2018.

Annual GTA residential real estate sales over $1 million (condominiums, attached and single family homes) reflected a 31% decline from 2017 levels in 2018, while sales over $4 million decreased 40%. 2018 sales over $1 million in the City of Toronto reflected a 19% contraction from 2017, as sales over $4 million fell 39%.

However, GTA top-tier performance gained traction in the latter half of 2018. $1 million-plus sales in the last half of 2018 increased 4% from the same period in 2017, though sales over $4 million were down 20%. In the City of Toronto, $1 million-plus and $4 million-plus sales in the last half of 2018 saw a 5% increase and a 10% decrease respectively. Overall, 21% of GTA real estate sold over $1 million in the last half of 2018 did so at above list price, while a significant 35% did so in the City of Toronto.

Brad Henderson, President & CEO, Sotheby’s International Realty Canada says:

Canada’s top-tier real estate market performance was dominated by Eastern Canada’s two largest metropolitan areas in 2017. Toronto’s top-tier real estate market emerged as a bastion of resilience, due in large part to the region’s stable economy and rapidly expanding population. Consumer psychology bounced back from temporary setbacks brought on by policy changes, rising rates and tighter lending guidelines. Montreal’s record-setting momentum continued in 2018, but there are clear indications that the market is now settling in at healthy levels.

The ascent of the GTA (Durham, Halton, Peel, Toronto and York) top-tier real estate market was dramatic and unprecedented in the three years leading up to 2018. $1 million-plus residential real estate sales (condominiums, attached and single family homes) surged 48% in 2015 over 2014, 77% in 2016 over 2015, then crested at historic highs with an additional uptick of 5% from 2016 to 2017.

2018 year-over-year sales volume comparisons misrepresent actual market performance given the inclusion of first quarter figures. The year’s top-tier market trends are better reflected in results from the latter half of 2018. While annual GTA residential real estate sales over $1 million (condominiums, attached and single family homes) were down 31% from 2017 levels to 14,255 properties sold in 2018, $1 million-plus sales in the last half of the year increased 4% compared to the last half of 2017. Consumer confidence and activity in the City of Toronto’s top-tier market resurged more quickly. 6,562 properties (condominiums, attached and single family homes) sold over $1 million in the City of Toronto in 2018, a decline of 19% from the previous year; however, $1 million-plus sales in the last half of 2018 experienced a 5% year-over-year gain in sales volume.

GTA top-tier condominium sales in the second half of 2018 reflected a strengthening market. 1,259 units sold over $1 million in 2018 compared to 1,296 units sold in 2017, a mild 3% decline. Between July 1 and December 31, 2018, GTA condominium sales over $1 million increased 12% year-over-year to 601 units sold, while eight units sold over $4 million compared to six units sold the year prior. Overall, 24% of GTA condos sold over $1 million and 13% of condos sold over $4 million did so above list price in the last half of 2018. During this time, sales of condominiums over $1 million in the City of Toronto were up 11% to 530 units sold, while luxury condo sales over $4 million were up 60% year-over-year to eight units sold.

The attached home market remained one of the most active top-tier segments in the GTA. While annual sales over $1 million decreased 26% year-over-year to 1,513 units sold, in the last half of 2018, overwhelming demand resulted in rapid sales velocity and a significant 54% of $1 million-plus attached homes and 25% of $4 million-plus luxury attached homes selling above list price. Within the City of Toronto, strong demand resulted in 61% of $1 million-plus and 25% of $4 million-plus luxury attached homes selling above list price. GTA sales of attached homes over $1 million between July 1 and December 31, 2018 increased 8% to 707 units sold, while luxury attached home sales over $4 million doubled to four sold in the last half of 2018. During this time, $1 million-plus attached home sales in the City of Toronto saw a 10% increase to 614 units sold, and luxury $4 million-plus sales increased from three homes sold in 2017 to four sold in 2018.

The GTA top-tier single family home market steadily regained momentum in 2018. Annual single family home sales over $1 million decreased 34% to 11,483 units sold in 2018, but between July 1 and December 31, 2018, $1 million-plus single family home sales stabilized with a 2% year-over-year gain. Furthermore, 17% of homes sold over $1 million in the last half of 2018 did so above list price. During this time, luxury home sales over $4 million were down a more significant 24% in the last half of the year to 95 units sold, due in part to a shortage of supply in prime neighbourhoods. In the last half of 2018, single family sales over $1 million in the City of Toronto increased 2% from the last half of 2017, with a significant 28% of homes selling above asking price. Luxury single family home sales over $4 million however, were down a more notable 16% in the last half of 2018 compared to the same months in the year previous, with 6% of homes selling above list price.

While demand for limited top-tier inventory sparked multiple offer scenarios, subject-free deals and sales above list price in prime neighbourhoods within the City of Toronto, the heated bidding wars endemic in past years calmed. In 2018, as the GTA market balanced, fatigued buyers were more likely to withdraw from overpriced listings or unnecessary competition.

If you are interested in reading the whole report head over to Sotheby's blog or click here.

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