A number of markets across the country are seeing a strong pick-up in the number of high-end homes that are selling. Real estate industry players say they think it’s because people are less worried about the housing market’s future. As always, this is still an exciting gamble, but one that it appears more wealthy individuals are now making.
A record 754 homes sold for more than $1.5-million in the Greater Toronto Area during the first four months of the year, according to statistics from the Toronto Real Estate Board. The corresponding number of homes that sold in that price range during the first four months of the year was 566 in 2013, 623 in 2012, 435 in 2011, 399 in 2010, 132 in 2009, 260 in 2008 and 250 in 2007.
Sales over $1.5-million are up by more than 30 per cent from a year ago, while sales of homes at all price points in the GTA during the first four months of the year are up by about 1.9 per cent. There is consumer confidence!
While luxury buyers don’t tend to take out large mortgages, they take note of interest rates as a reflection of where the market will head. Low interest rates are feeding the lower end of the market, and those sellers tend to become the next buyers for luxury homes.
As opposed to last year’s concerns about what interest rates were going to do, this year the rates are low again and they are projected to remain the same. This fact gives people confidence, as the most important question of a luxury home buyer is: “If I buy this property, will it show reasonable appreciation, and if I decide to sell it in 3 to 5 years, how much of a return can I count on?” The answers are encouraging!