The red hot Toronto real estate market is hotter than you may think, especially for higher-end dwellings. High-end homes are being snapped up at a record pace by high-net worth individuals. In fact, Toronto now holds the distinct honour of being named the world’s hottest luxury real estate market.
In the report by Christie’s International Real Estate, Toronto is the only city among the top 10 real estate markets in the world to see growth in luxury home sales year-over-year in 2014. High-end homes saw a sizeable 37 percent increase last year versus only a four percent increase in 2013.
The study cites the chronic lack of inventory for the jump in the price of luxury homes. The average price of high-end homes has topped $1.2 million, tipping the scale at $4.8 million in Toronto’s most desirable neighbourhoods like Forest Hill, Lawrence Park and Rosedale.
Record low mortgage rates propelled the Toronto real estate markets to new heights. Toronto mortgages are among the lowest in the country. Homebuyers are able to locked-in as well below three percent for a five year term.
If you thought high priced homes remained on the market for a while in the Big Smoke, you’d be wrong. Higher-end homes worth $1.2 million and higher actually spent less time for sale than other desirable locations worldwide. Homes spent an average of about a month – 31 days – on the market, eight fewer days than 2013.
To put Toronto’s real estate market into perspective, let’s look at another desirable location: San Francisco. Homes in San Fran took 71 days to sell compared to Toronto’s 31 days. Meanwhile, the average worldwide is 254 days.
While the Toronto real estate market is growing fast, it’s far from the priciest market in the world. Toronto came in at a respectable 10th on the general luxury index, which looked at overall prices (instead of just growth and demand). Meanwhile, London, England came in first as the priciest market.
2014 was a banner year for the Toronto real estate market. It marked the second best year on record. If it wasn’t for the short supply of homes, the previous record would be toast.
Of note, luxury resorts were leading the way in growth compared to urban areas. The highly-coveted Muskoka region saw strong growth in luxury home sales, especially for homes prices $2.4 million and above.
While the spike in the sale of luxury homes doesn’t necessarily mean that the average sale price was up, it does show buyers are once again interested in higher-end recreational properties. This is a good sign, since this hasn’t happened since before the financial crisis of 2008.