Inventory is decreasing in key markets, leading to a shortage of available homes.
RE/MAX Canada examined luxury market trends in 15 Canadian cities from coast to coast, and found rapid depletion in housing stock is placing upward pressure on values at lower price points and sparking an uptick in demand. Upper-end sales in Q1 2023 have fallen short of peak levels reached in Q1 2022, but are on par or ahead of Q4 2022 figures in 10 of the 15 markets surveyed. Much of the activity is being attributed to pent-up demand, which has been building since mid-2022. Listings are few and far between in most areas of the country, making finding the right home difficult.
TRENDS TO NOTE:
- Demand is increasing
- Sidelined buyers are back
- Activity is expected to rise
The lack of available homes listed for sale has helped prop-up housing values across the country, despite softer overall demand. Prices have held up relatively well in major centres, with the year-over-year value of luxury homes in markets such as Calgary and Moncton increasing. In an effort to maintain supply and curtail demand from foreign buyers, the government implemented the Prohibition on the Purchase of Residential Property by Non-Canadians Act on January 1, 2023, which had unintentional consequences on the construction of purpose-built residential rentals and mixed-use projects. Amendments to the Act were made effective March 27, 2023.
The Amendments to the Act, effective March 27, 2023, enabled more work permit holders to purchase a home to live in while working in Canada, repealed existing provisions so the prohibition doesn't apply to vacant land, and increased the corporation foreign control threshold from three to 10%. The bulk of purchasers remain local in most Canadian markets, with the exception of some out-of-province activity in the first quarter. After a tumultuous 2022, cautious optimism is growing in major centres across the country, with competitive offers becoming increasingly common.