Big-ticket homes have never been in higher demand in the nation’s capital, according to a new report from one of Canada’s largest real estate firms.
As rising demand and a shrinking inventory drive home prices to record highs, the number of so-called “luxury” properties – those valued at $1 million or more – changing hands in the capital is also soaring, the report from Re/Max says.
A total of 1,766 homes sold for at least $1 million in Ottawa in 2021, more than double the previous year’s tally of 750 such “luxury” transactions, the real estate firm said this week.
That translates to a jump of 135.5 per cent – the highest increase among Canada’s five largest cities last year.
Calgary came next at nearly 123 per cent, followed by Toronto – where Re/Max defines a “luxury” home as a property with a price tag of more than $3 million – at 113 per cent.
Aggregate price to top $800K
The findings should come as no surprise to any close observer of Ottawa’s red-hot real estate market.
Recent data from Royal LePage showed the city’s aggregate home price jumped 17.2 per cent year-over-year in the fourth quarter of 2021 to $739,700. The company is forecasting the aggregate price of an Ottawa home will top $800,000 this year, bringing the cost of the average house ever closer to the million-dollar mark that once defined a “luxury” property.
“The currency of home ownership has clearly taken on a new dimension in 2021,” Re/Max Canada president Christopher Alexander said in a news release.
“The pandemic fuelled a run on real estate that has encompassed every segment of the market, and the value of housing has increased exponentially as a result – not only as a form of shelter but a desirable asset class that provides an attractive return on investment.”
Robust economic growth
Brokers surveyed by the company cited a couple of key factors for the surge in seven-figure home sales in 2021: a robust economy fuelled by pent-up consumer demand and historically low interest rates that make borrowing money for a home cheaper than ever.
Re/Max also noted that “trade-up activity was brisk” in most Canadian markets as buyers “cashed in on substantial equity gains” when selling their existing properties.
“More so than ever before, it appears that buying a home is a retirement strategy which many people believe will help that next generation achieve home ownership,” Re/Max executive vice-president Elton Ash said.