38 Park Lane Circle, a palatial eight-bedroom house, is listed with an asking price of $23.888-million. The current listing has been on the MLS for more than 60 days.Re/Max Realtron Realty Inc.
Sales in the luxury niche of Toronto real estate take place in their own rhythm, but the uncertainty permeating the overall market is also apparent at the high end.
At the same time, measures aimed at cooling the housing market during the high-octane run of a few years ago may be acting as a drag on sales now.
In the Toronto core, 13 properties changed hands at prices of $10-million and above on the open market last year. That’s in line with the 14 homes that traded in that price range in 2023.
The average price in that bracket in 2024 was $13.77-million; in 2023 it was $13.2-million.
Those sales on the Multiple Listing Service of the Canadian Real Estate Association only tell part of the story because buyers and sellers in the upper echelons often prefer to strike a private deal.
While the number of transactions on the MLS in that range remained steady, agents say buyers can be capricious and quick to walk away from negotiations at times.
Adam Brind, a broker with Sotheby’s International Realty Canada, says sentiment has been shifting rapidly in the market for the past year or two as buyers and sellers react to economic and geopolitical forces.
He believes it’s harder to put deals together in the “ultra- luxury” niche as some investors from overseas choose to avoid Canada altogether and homeowners in Toronto decide against trading up.
Mr. Brind says some buyers in the upper echelons are put off by the weight of such policies as the federal foreign buyers’ ban and changes to the City of Toronto’s land transfer tax.
For a buyer pool that was small already, policies designed to cool the broader market when it was overheated have shrunk that cohort even more.
In Toronto, the so-called “luxury tax” came into effect Jan. 1, 2024, after City Council approved an increase to municipal land transfer tax rates for homes valued at $3-million and above.
The graduated rate starts at 3.5 per cent of a home’s value and increases on a sliding scale so that buyers of higher-priced homes pay a larger percentage in tax.
Mr. Brind says some people who already live in Toronto are deciding to stay put as a result of the levy, which tops out at 7.5 per cent of the purchase price on the portion above $20-million.
Buyers of very expensive real estate are not motivated by necessity in the same way that families of limited means are. Trading up in that bracket is more of a want than a need.
Mr. Brind says people with deep pockets are sometimes unwilling to pay more in taxes.
“Even people who can afford it, won’t pay,” he says of affluent buyers. “They’re choosing not to move.”
The federal government unveiled plans for a foreign buyers’ ban in 2022 in response to fears that prices for residential property were soaring out of the reach of average citizens.
The Prohibition on the Purchase of Residential Property by Non-Canadians Act came into effect on Jan. 1, 2023. The policy applies to foreign corporations and individuals who are not citizens or permanent residents of Canada and includes direct and indirect purchases.
The ban was initially set to last for two years, then later extended until Jan. 1, 2027.
The rules provided exceptions, including international students and temporary residents with valid work permits.
Mostly the property markets covered by the ban are large urban centres where demand is highest. Popular vacation spots such as Whistler, B.C., and coastal Nova Scotia, for example, are exempted.
In Toronto, Mr. Brind points out, the bidding frenzies which saw multiple buyers compete for one property were mostly confined to the bracket under $2-million.
Properties of $8-million and up were usually changing hands at a much calmer pace, he says.
“It has impacted this part of the market that was never a problem.”
At 45 Bayview Ridge, Mr. Brind has listed an opulent estate on 3.12 acres overlooking the Rosedale Golf Club with an asking price of $22.5-million.
The French-style château near Bayview Avenue and York Mills Road has six bedrooms and 10 bathrooms in more than 15,000 square feet of living space.
The interior includes a wine cellar, a nanny suite and indoor pool.
Outside, the infinity-edge pool, reflecting pond and tennis court are surrounded by lush gardens.
Properties in that price range often take a year or two to sell. At 38 Park Lane Circle, a palatial eight-bedroom house is listed with an asking price of $23,888,000.
The current listing has been on the MLS for more than 60 days.
At the Residences of the Ritz-Carlton Toronto, a 6,000-square-foot suite is currently listed for $22.5-million. The asking price in June, 2023, was $23.5-million for unit 4602/4603 at 183 Wellington St. W.
Mr. Brind believes the foreign buyers’ ban holds back buyers from overseas who have a choice of where to set up their business and home.
“How easy is it to move my family there?” is one of the questions they ask, Mr. Brind says.
He says buyers are looking at investing in such cities as Chicago, New York or Boston instead.
If fewer business mavens are coming to the city, liquidity in the high-end real estate market decreases, which then compounds the problem, he adds.
He adds that taxes and red tape are driving entrepreneurs and business owners out of the country.
“Over the last three years, I’ve had absolutely half a dozen direct clients say, ‘we’re out of here. Enough is enough,’” he says. “And they are the job makers.”
Many high net-worth buyers and sellers also prefer to trade properties without listing on the MLS.
CREA has restricted the marketing of such “pocket listings” but transactions are still taking place off-market.
Andre Kutyan, a broker with Harvey Kalles Real Estate, was recently talking with one agent who had more than one interested buyer for the exclusive sale of a Forest Hill home above the $30-million mark.
“There were at least three or four other buyers who were in that snack bracket who haven’t bought yet.”
Mr. Kutyan says sellers often keep the quest for a new owner under wraps because they don’t want to overexpose the property with a long stretch on MLS. Others may be prominent residents who choose to keep the deal quiet for privacy reasons.
Mr. Kutyan says there are plenty of factors that affect the high-end market for domestic and overseas buyers.
China’s government, for example, has recently increased restrictions on taking money out of the country, and Iran’s currency has lost ground.
Mr. Kutyan has been working with one buyer recently who has homes in two locations and wants to add a third in Toronto. The perceived value is important to the buyer.
“It’s all about the deal,” he says.
Still, Mr. Kutyan doesn’t believe that a lot of high-end buyers who really want to move are held back by the land transfer tax, for example. He notes that many rushed to close deals just before it came into effect, but many people are willing to absorb the levy.
“Yes, they’re going to spend significantly more in land transfer tax, but is it going to stand in the way? Probably not.”
Analysts at credit rating agency Morningstar DBRS note that Canada’s population swelled by about 3 per cent in 2024 with 1.2-million immigrants entering the country.
Julia Specht, Michael Heydt, Travis Shaw and Thomas Torgerson of the Global Sovereign Ratings sector say in a report that the more restrictive policies recently implemented in Canada are likely to dampen economic growth in the near-term.
Demand for housing may also ease in the short term, they say, but the team does not expect a significant impact on affordability in the medium term.