The "ultra-luxury" real estate market in Toronto is classified as any property sold above $3 million & 2020 was a record year with a 56% increase in sales vs. 2019 despite a global pandemic.
A question that comes through everyone's mind when they hear this is "WHY IS THIS HAPPENING"?
It's extremely counter-intuitive, as rationally you'd think there would be less spending during one of the largest economic depressions our society has ever experienced, yet we saw sales numbers that rival the red-hot market of 2017.
There are several factors at play that have caused the ultra-luxury real estate market in Toronto to go into overdrive in 2020, but it primarily comes down to the fact more people were stuck at home and were now utilizing it as a place to live, work, eat & exercise which necessitated more space.
On top of this, there was extremely low lending rates for mortgages which allowed people to increase their budgets.
Lastly, there was more domestic spending as result of very little international travel being conducted due to enhanced travel restrictions around the world.
When we look at the numbers, more than 1000 properties above $3 million sold in 2020.
This was just slightly more than the record that was set in 2017 when we were experiencing an extremely hot market across Toronto & the surrounding areas.
Homes above $4 million saw a 54% increase in sales vs. previous year while homes above $5 million saw a 44% increase in sales vs. previous year.
While sales within Toronto stayed fairly consistent, it was the 905-areas that really performed well as people looked for more space & greenery.
Halton Region was a 188% increase in the number of sales above $3 million compared to the previous year.
Peel Region saw a 112% increase in the number of sales & York Region was a slightly lower with a 85.5% increase.
The primary driving force behind surging sales in these areas is the fact that you get a lot more land & interior space for your money when compared to neighbourhoods within Toronto (see article here for comparisons).
What performed better ~ condos or homes?
Surprisingly both performed extremely well in the ultra-luxury sector for 2020!
While the rest of the condo market softened due to a large increase in inventory, condo sales above $3 million rose by 29% compared to 2019.
Across the board, record number of condo sales were recorded in the $3, $4 & $5 million price points to levels not seen since 2017.
This was mainly concentrated to the Bay St Corridor, Waterfront, Annex, Rosedale & Bridle Path areas.
A contributor to this increase in sales are retirees/people downsizing from larger homes into luxury condos which offer similar square footage to a home, but are much more manageable to age-in-place from.
We are also seeing people that prefer a downtown-living lifestyle opt for larger units as they want more space but don't necessarily want to go outside of the city to do so.
What is 2021 going to look like?
While it's impossible to predict what will happen this year with COVID19 & it's knock-on effects to the economy/real estate market, it appears like we could be in for another record year if all the same conditions as 2020 continue.
Though things may be slower during the 1st quarter of 2021 due to lockdown restrictions, the pent-up demand will cause the market to go into overdrive as jobs are regained & economic conditions improve as vaccines are deployed across the country and restrictions are lifted.
In 2021, we can also expect over 400,000 immigrants to arrive in Canada with nearly half of them settling in Ontario alone which will cause even stronger demand for housing.
What do you think will happen in 2021?
Let me know in the comments section below!
Rylie C.
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