A new report by Royal LePage says sales of luxury homes are "skyrocketing" across Canada.
Another report from Statistics Canada looks at the other end of the housing market, reporting that 14 per cent of Canadian households (1.7 million) are facing affordability issues because of high shelter costs.
Royal LePage says luxury home sales are up by more than 125 per cent compared to the first three quarters of last year, in Calgary, Edmonton and Halifax. Luxury sales are up by 57.2 per cent Vancouver, 33.9 per cent in Ottawa, 31.5 per cent in Montreal, 27.3 per cent in Victoria, 25 per cent in Winnipeg and 20.3 per cent in the Greater Toronto Area.
The company sells luxury homes under its Carriage Trade luxury brand if the home's listing price is more than three times the average residential price in most markets, or four times the average price in other markets. For example, in Toronto, Montreal, Vancouver, Victoria and Calgary, the luxury home market refers to houses priced at $1 million and up.
In the Vancouver area during the first nine months of 2006, there were $1,935 homes sold for more than $1 million. Toronto had 1,309 million-dollar home sales during the same period.
Canada Mortgage and Housing Corp. says that the largest percentage of the baby boom population was born during the early 1960s. The group is now in their peak earning years, and many of them are spending their money by moving up to luxury accommodations. Mortgage interest rates remain low and more mortgage products are available than ever before, which is also helping to fuel the move-up market.
But not everyone has been able to take advance of the strong economy, as the Statistics Canada report by Jacqueline Luffman shows.
Shelter costs are considered "affordable" if they are less than 30 per cent of before-tax household income. Luffman says of the 14 per cent of households that spent more than 30 per cent on shelter costs in 2004, 12 per cent spend between 30 per cent and 50 per cent, and two per cent spent 50 per cent or more.
Renters are more likely than owners to have affordability problems, says the report. Thirty-one per cent of renters have affordability issues, compared to six per cent of owners, says Luffman. "For these owners, the situation may have been temporary or a matter of lifestyle choice -- for example, in the case of young families who are likely to have large mortgage payments or debts," she says. "About half of owners who spent 30 per cent or more of their income on shelter in 2001 had sufficient income to rent affordable housing in their area." Most of the renter households with affordability problems consisted of people living alone, those relying on government assistance and those in a low income group, the report says.
"Somewhat surprisingly, food and clothing expenses took up a similar proportion of the budget for all groups, regardless of their ability to afford housing," says Luffman.
According to Statistics Canada's 2004 figures, Toronto has the highest shelter costs in the country, totaling an average of $12,730. Next is Calgary at $11,640 and Vancouver at $11,520. Rural areas had the cheapest shelter costs at $6,870.
The least expensive city in Canada is Quebec City at $7,750.
But in the next few years, it doesn't look like there will be a shortage of people looking for homes at the top end of the market. Royal LePage commissioned Maritz Research Canada to ask Canadians about luxury homes, and found that 37 per cent of those 18 and over currently live in a luxury home, plan to buy one soon, or aspire to live in one. Most (25 per cent) said the most important criteria in considering a luxury home is its investment potential, with others citing proximity to excellent schools (19 per cent) and the prestige of the neighbourhood (17 per cent).
Asked what features of the house were most important, 21 per cent said a commercial style kitchen, 14 per cent wanted an indoor or outdoor swimming pool, and 12 per cent said smart wiring. The poll found a "gender divide" because while 26 per cent of women citied the commercial-style kitchen as the most important feature, only 15 per cent of men did. However, 11 per cent of the males cited a luxury in-home movie viewing theatre as an important feature, compared to only five per cent of females.
"The pronounced increase in the number of luxury homes sold across the country is a strong reflection of Canadians' confidence in the economy and the real estate market," says Phil Soper, president and CEO of Royal LePage. "House values have appreciated much more quickly than the underlying economy for much of this decade."
