As the real estate market in Canada experiences a surge in the number of homes for sale, one particular segment seems to be defying the odds – the luxury market in Toronto. With prices starting at $4 million, the luxury market in Toronto has seen steady sales and rising demand, even amidst stubbornly high interest rates.
To delve deeper into this phenomenon, we sat down with Paul Maron, a broker with SBE International Realty in Canada, to get his insights on the current state of the luxury housing market in Toronto. According to Paul, the luxury market in Toronto is defined by properties priced at $4 million and above for houses, and $3 million and above for condominiums. Despite the high price tags, there has been decent demand in this segment, with buyers seeking top addresses and turnkey, fully renovated properties.
However, Paul notes that there has been a shift in buyer behavior due to the higher interest rates. Buyers across all segments of the market now have the luxury of time, with no rush to make a decision. This more civilized approach to negotiations has resulted in buyers taking their time and carefully considering their options before making a purchase.
When it comes to the ultra-luxury market, properties priced over $10 million, Paul mentions that there has been very little activity due to the foreign buyer ban. With the ban in place, the segment is expected to remain stagnant until the ban is lifted.
Despite the common misconception that the luxury market is not impacted by interest rates, Paul emphasizes that luxury buyers are indeed sensitive to interest rate changes. Many luxury homeowners leverage their primary residences to purchase additional assets, making them susceptible to fluctuations in interest rates.
In terms of the types of properties that are attracting buyers in the luxury market, Paul highlights two ends of the spectrum – fully renovated, move-in ready homes and value-oriented buyers purchasing fixer-uppers. Properties in the middle, that are only partially renovated, are facing challenges in the current market.
As conversations around the recent capital gains tax changes continue to buzz, Paul notes that while it is a consideration for some buyers and sellers, the real estate market is not as liquid as other asset classes. This means that any potential impact from the tax changes may take time to materialize in the real estate sector.
Overall, the luxury housing market in Toronto is experiencing a unique dynamic, with buyers taking their time and carefully considering their options in the face of high interest rates and changing market conditions. As the market continues to evolve, it will be interesting to see how luxury buyers navigate these challenges and opportunities in the months to come.
