Vancouver's "luxury" real estate market

In Vancouver, general enthusiasm for playing in the real estate market has cooled, but not for the upper crust, according to Royal LePage Real Estate.

While Greater Vancouver has witnessed sliding sales figures for the last several months, transactions valued at more than $1 million are up just over 57 per cent for the first nine months of 2006.

That's the price barrier Royal LePage uses to define the rarified air of the "luxury market," or "carriage trade." (And Royal Lepage just happens to have a division under the Carriage Trade banner.)

In total, 1,935 Greater Vancouver homes traded hands for $1 million or more between January and October, compared with 1,231 for the same period a year ago.

The buyers, Royal LePage CEO Phil Soper said, are typically baby boomers who have accumulated a lot of wealth, and are eager to throw it around on real estate.

"These people have disposable income, [real estate] is something they trust, and they continue to invest in it," Soper added.

This top segment of the market, Soper said, is different from the other segments and is driven by its own set of variables.

Whereas the entry-level market is more atuned to unemployment rates and the rate of income growth, the luxury set follows stock markets and investment growth, Soper added.

"The equity markets and stock markets have appreciated nicely this year, as long as you don't have everything in income trusts," Soper said.

However, Tsur Somerville, director of the centre for urban economics at the Sauder School of Business at the University of B.C., said it is questionable whether the $1-million mark really captures the luxury market in Vancouver.

"Almost every single-family home west of Oak Street falls into that category," Somerville said, and not just mansions found in the suburbs.

For a lot of Vancouver, the $1-million threshold captures more of the upper-middle-class market than the luxury component.

"[So] it's not necessarily clear to me that, because of the nature of our market, if you're defining luxury as $1 million, you can make the same conclusions than you might in another market."

Vancouver isn't the hottest high-end market. In oil-fuelled Calgary and Edmonton, luxury sales more than doubled, 160 per cent and 129 per cent respectively. However, in Edmonton the definition of luxury starts at $700,000.

Even Halifax saw a mountainous spike of 153 per cent, although $600,000 is its luxury cutoff, and the difference in transactions is 43 in 2006 versus 17 in 2005.

And other markets saw significant increases in high-end sales. In Montreal, luxury sales were up 32 per cent, in Toronto, sales were up 20 per cent and in Ottawa the rise was 34 per cent.

The rise, according to Royal LePage, has a lot to do with the aspiration of buyers. Besides counting high-end transactions, the real-estate firm also commissioned Maritz Research Canada to conduct a poll on buying intentions.

That poll found that 37 per cent of Canadians 18 or older live in a luxury home, plan to buy one or one day aspire to "live in the lap of luxury."
"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," Soper said in a news release.

(prepared by Derrick Penner/Vancouver Sun)