For luxury homes, $10-million is the new benchmark
February 10th, 2007By Unnati Gandhi - The Globe and Mail
Five bedrooms, four bathrooms, an indoor sauna and sunroom, a private office overlooking Fame Lake and a custom fireplace made of local Precambrian granite that extends from the living room up to the second floor.
With specs like that, the 5,500-square-foot Engle Estate in Yellowknife — the most expensive residential property currently listed in the North — could easily fetch several times the $2.6-million it is valued at, were it a little further south.
That’s because demand, for one, is holding strong.
The recent listing of a $10-million home in Banff, Alta., the most expensive to go on sale in that town, is simply indicative of the booming luxury home industry in Canada, real estate experts say.
If anything, that $10-million price tag is considered low for many markets in the West.
“In a place like Calgary, where you have a whole bunch of economic growth with the oil industry, and a lot of people getting pretty good bonuses, it’s no surprise that it’s allowing them to move upscale in the homes they are purchasing,” said Bob Dugan, chief economist at the Canadian Mortgage and Housing Corp. market-analysis centre.
“But you look at a place like Ottawa, where the senior officials are politicians and techs, the bonuses aren’t so good, so the market for luxury homes is that much smaller.”
Looking at the threshold for what constitutes a “luxury” home, Re/Max Realty recently found that a luxury home in Toronto and Vancouver was one that sold for at least $1.5-million.
In Victoria, Kelowna and Calgary, the cutoff was $1-million.
In other markets, such as Ottawa, Edmonton, and Saint John, luxury meant more than $500,000.
But estates for sale on the multiple-listing service show that the luxury home market is faring much better from Lunenburg, N.S., to the Gulf Islands in British Columbia.
In Lunenburg, where the average resale price of a home sits at about $205,000, the three most expensive homes in the province are listed at roughly $3.5-million.
“These are waterfront homes on multiple acres,” said Tradewinds Realty Inc. broker Tim Harris. “They’ve got tennis courts, very good landscaping, a wharf, deep-water access, all the things people are looking for in a property of this kind.”
But what’s interesting, Mr. Harris notes, is that the majority of buyers are Americans from the northeastern states and, increasingly, the British and Germans.
“We have clients just showing up unannounced from the U.S., purchasing these homes the same day because they’re so affordable compared to similar properties in the south,” Mr. Harris said.
“One woman didn’t even bring her husband.”
Although he remembers one house in Nova Scotia being sold for $5.3-million in the past two years, he said the “cut-off price” is more likely to hover at about $3.5-million. “We can’t seem to go higher than that.”
That’s not a problem on the West Coast. In Vancouver, where the average resale price of a home at the end of December was $519,000 (the highest in the country) according to the Canadian Real Estate Association, some of the most expensive homes listed have an asking price of $17.5-million.
“In West Vancouver especially, I would say there are quite a few homes that would aspire to that level,” said Re/Max real estate agent Lionel Lorence. “There’s a large enough market out here that $10-million is an acceptable price for, say, 440 feet of oceanfront. By the time you build a home on that, it would exceed that price right away.”
Most homes purchased in Victoria, where a $17-million price tag isn’t uncommon either, are secondary homes purchased, again, by people from Alberta, he said.
But in the end, price comes down to demand.
“Some markets are a lot hotter and tighter than others,” said Christine Martysiewicz, spokeswoman for Re/Max Ontario Atlantic Canada. “It depends on monthly sales and how they stack up against new listings.”
Ms. Martysiewicz said demand is so high in some regions that peripheral neighbourhoods to “hot-pocket areas” are just as much in demand, further pushing up the price of these luxury homes.
The most expensive home for sale in Canada is still Edgemere Estate in Oakville, Ont., with an asking price of $45-million.
In Toronto, 83 The Bridle Path has an asking price of $16-million, the highest listed on MLS. But Ken Ho, broker for Sultan Realty, says that there are at least 10 homes on The Bridle Path that have values ranging from $14-million to $16-million.
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