A bubble created by a housing shortage? People taking advantage of low interest rates, and outbidding each other? It’s wild! According to ReMax Canada, the luxury housing market is hot. Nay, not just “hot”, but record shattering, breaking all-time records in most Canadian cities (nine out of 13 regions had record breaking numbers).
Why? “…improved economic performance, increased personal wealth, immigration and foreign investment” says ReMax in the Upper End Market Trends report.
Each region has a different definition of “luxury”, from $400,000 in St. John’s to $2-million in Greater Vancouver. A luxury home was most expensive in Greater Vancouver at $2-million, followed by $1.5-million in Greater Toronto and Montreal Island.
According to the Globe and Mail:
“Upper-end markets were most abundant in Atlantic Canada and smaller centres in Ontario, where luxury home prices started at $400,000 in St. John’s, $450,000 in Halifax-Dartmouth, $500,000 in London St. Thomas, and $750,000 in Ottawa and Hamilton-Burlington.
Winnipeg and Edmonton saw the luxury market around $500,000 and $850,000 respectively.”
“While comparisons are being made to one of the worst first quarters on record – it’s important to note that the bounce back in many areas including Greater Vancouver, Victoria, Winnipeg, London-St.Thomas, Greater Toronto, Ottawa, Montreal (Island), Halifax-Dartmouth, and St. John’s – exceeds record levels reported in years past,” ReMax stated.
So.. what happened? Maybe low interest rates have created a bubble as buyers flock to pick up properties on what they see as a market with limited downside, leading an increase in average national sale prices as buyers bid each other higher in bidding wars. The market survey doesn’t mention anything about the rapid rise in prices, and the role the appreciation may have played in pushing more homes into so-called luxury territory.
How bad has it gotten? Check out Vancouver’s Crack Shack or Mansion! .