TORONTO, Jan. 12, 2022 – After nearly two years of frenzied real estate market activity and a record number of home renovations, Canada’s housing landscape has changed significantly. Historically low interest rates combined with easy access to borrowing accelerated demand from local buyers, leveraging their current homes to trade up. Baby boomers made the decision to forego downsizing or moving into assisted living facilities and instead opted to hold onto their homes.
Analyzing the markets in Canada’s most in-demand cities — Halifax, Montréal, Ottawa, Toronto and Vancouver — an Engel & Völkers luxury home report finds Canada’s premium real estate market is experiencing precariously low supply due to unparalleled local demand. The Bank of Canada kept interest rates low and will continue to do so through mid-2022. This, coupled with low supply, will define the market for the first half of the year. If supply does not replenish, prices will continue to climb in 2022.
“Despite border closures and recurrent lockdowns, Canada’s continued rise in real estate activity proves that demand is overwhelmingly local. Interprovincial migration emerged as a trend in 2021 with many buyers citing ‘coming home’ as their reason for doing so. The supply crunch in Canada’s major cities will characterize the market in 2022. We estimate that more than 80 per cent of luxury home sellers this year will be Gen Xers and millennials. 2022 will be a year to watch closely, especially when international migration returns to regular levels.”
Anthony Hitt, president and CEO, Engel & Völkers Americas
Halifax witnessed a 155 per cent increase year-over-year in homes sold priced over $1 million in 2021, cementing the region as one of Canada’s fastest growing real estate markets. Approximately 40 per cent of all demand came from out of province, with net migration to Atlantic Canada in the first two quarters surpassing both 2019 and 2020 combined.
Montréal experienced an increase of 150 per cent in the number of units sold priced $1 – 3.99 million compared to 2019. Sales of condos in this price range grew by 87 per cent year-over-year in December, meaning the condo market in the city core will be one to watch in 2022. For homes priced $4 million and higher, total home sales have nearly doubled compared to the previous year.
Ottawa‘s market saw an increase of 88 per cent in the number of units sold priced between $1 – $3.99 million year-over-year. As a result, the number of transactions for homes priced over $1 million has more than quadrupled since 2019, growing from two per cent to nine per cent.
Toronto home sales in the $1 – 3.99 million range have nearly doubled compared to the previous year, growing by 87 per cent. At year-end, the total number of units sold in the $4 million and higher range increased by 240 per cent year-over-year.
Vancouver saw the number of units sold in the $8 million-plus category increase by 115 per cent year-over-year. This unparalleled demand for luxury inventory is driven largely by local homebuyers and investors, many recognizing real estate as a stable and practical investment.
CANADA’S WEALTHIEST ACCOUNT FOR THE LUXURY REAL ESTATE BOOM
The Wealthiest Millennials: More than 65 percent of Millennials with household income levels of $250K+ are planning to sell a home in 2021 or 2022, accounting for more than half of all home sellers within this wealth demographic. However, the Wealthiest Millennials are not fleeing the cities. In fact quite the opposite, as 60 percent reported the desire to purchase in an urban city. Instead of relocating from suburban or rural environments, this sentiment actually represents a shifting of priorities among the Wealthiest Millennials. Eighty-three percent already own properties in urban cities and an overwhelming 96 percent said that their parents currently live with them or believe their parents will move in with them in the future. This suggests that the Wealthiest Millennials are staying in urban environments and looking for spaces that can better accommodate current or future multigenerational living.
● Millennial Entrepreneurs: Millennials accounted for two-thirds of luxury home sellers who are also in the process of starting a business. No longer constrained by the limits of a physical office, remote work has allowed Millennial Entrepreneurs the flexibility to lead their companies from anywhere in the world. As a result, 29 percent of Millennial business leaders are relocating to new areas. While the majority of this cohort indicated a preference to live in an urban city, a significant 28 percent want to move to rural areas. This may be because Millennial Entrepreneurs are very family-oriented. Individuals within this segment are more likely than their peers to be married, living with a partner or have young children, and 20 percent are responsible for the care of at least one parent. Perhaps it is not surprising then, that 83 percent of Millennial Entrepreneur home sellers are committed to changing their lifestyle as a result of the pandemic in order to ensure they are never separated from their families again.
● Covid HENRYs: HENRY is an acronym for “High Earners, Not Rich Yet” and refers to young professionals who have an annual household income between $100,000-$250,000. Covid HENRYs are the members of the Millennial and Gen Z generations who emerged from the pandemic within this salary range, yet haven’t amassed the same amount of wealth as older generations who have been in the workforce for a longer period of time. More than half of all luxury home sellers in 2021 and 2022 will be Covid HENRYs. A third of Covid HENRYs work remotely and nearly half of Covid HENRYs want to travel globally and have more unique experiences. Forty-one percent of Covid HENRY luxury home sellers also own a second home, indicating a desire to sell in order to more actively pursue travel and experiences. As a whole, Covid HENRYs are more evenly split when it comes to their desire to live in cities (49 percent) or suburbs (43 percent).
● Early Retired Gen Xers: More than one in five of all Early Retired Gen Xers plan to sell a home in 2021 or 2022, accounting for 27 percent of all luxury home sellers. Historically, those who reach retirement plan to downsize their homes. However, today’s Early Retired Gen Xers are facing atypical situations. Thirty-nine percent have adult children, parents or other extended family living with them in their home. In fact, 58 percent of Early Retired Gen X luxury home sellers have had family move in since the pandemic, driving them to list their current homes in favor of larger homes with more bedrooms. More than half of Early Retired Gen X luxury home sellers are looking for their next home in rural areas.
