Diverging Paths: Canada's Luxury Real Estate Markets in 2023

In the first half of 2023, Canada's luxury real estate markets have shown distinct performances, reflecting a shift from universal trends to those influenced by regional nuances. While the challenges of increasing mortgage rates, economic uncertainty, and macroeconomic headwinds remain, the market dynamics in the country's major cities are beginning to show unique patterns.

According to Sotheby’s International Realty Canada's mid-year report, Vancouver's ultra-luxury residential market has seen a significant uptick in sales activity and consumer sentiment. This is attributed to the influence of legacy wealth planning and generational wealth transfer, which has led to a resurgence in demand and sales activity. However, persistent housing shortages have capped potential transactions and rising mortgage rates have somewhat dampened buyer activity. Toronto, Canada's largest luxury real estate market, continued to draw buyers and investors despite a slower start to the spring season. The city's status as the economic hub of the nation and primary immigration destination has contributed to steady market traction. Nevertheless, ongoing supply challenges have frustrated potential buyers and hindered sales.

The luxury real estate market in Montreal saw a slowdown in sales activity in the first half of 2023, with an overall decrease in sales volumes. Despite active listings remaining below historical averages, luxury buyer activity also slackened, particularly in the city’s condominium market. This resulted in an increase in conditional offers, price adjustments and days on market, as prospective home buyers negotiated from a position of empowerment, requiring flexibility from prospective home sellers to enable a sale. Contrarily, Calgary's luxury housing market remained buoyant, supported by positive consumer sentiment and consistent demand absorbing available inventory. The city's economic optimism and attractive luxury housing prices have continued to draw migration and real estate investment from other parts of Canada.

"The Canadian luxury housing market has remained remarkably resilient despite the headwinds of multiple interest rate hikes and unpredictable economic performance," says Don Kottick, President and CEO, Sotheby’s International Realty Canada. He further adds, "Following a year-long period of reconsideration and recalibration, qualified and highly motivated real estate buyers and sellers emerged from the sidelines over the spring, driving a bounce back in luxury market activity."