On January 15, Sotheby’s International Realty Canada released its Top-Tier Report, an examination of real estate activity in the $1 million-plus price range in Canada in 2019. If the report is any indication, realtors wary of the sector amidst significant market cool-downs in Vancouver and the GTA now have new reason to set their sights on high net-worth consumers.
The report found that the upper echelon of properties in three of the four markets studied – Toronto, Vancouver, Montreal, and Calgary – saw a significant uptick in activity in the latter half of 2019.
In Vancouver, an increase in sales was seen not only where one might expect – the $1-2 million range, which is still essentially starter-level in the city – but in the $2-4 million segment as well. While sales of the former increased 44 percent year-over-year, sales of the latter increased an equally dramatic 32 percent over the same period. (Upper-tier condo sales, however, have been sluggish.)
Toronto’s luxury market also fared well in 2019, but not to the same extent as Vancouver’s. Sales of properties between $1 million and $2 million increased 25 percent compared to 2018, with those in the $2 to $4 million range edging up by 12 percent.
Gains in Montreal, where the luxury market is the most recent beneficiary of the city’s economic boom, were modest in comparison to Toronto and Vancouver, but record-setting nonetheless. $1-2 million properties experienced a 13 percent increase in activity. Improvements in the $2-4 million segment were more subdued – 7 percent year-over-year – but the $4 million-plus price range saw a 64 percent increase in sales.
Calgary was the only city studied where top-tier real estate continued to languish. Sales in the $1-2 million category shed 13% compared to 2018 levels; those in the $2-4 million range experienced a 23% decline.
Implications for realtors
An uptick in luxury sales not only points to a healthy market – note which city’s upper-tier was the only one to experience sales declines above $1 million – but to opportunities for real estate agents. Large price tags can mean large commission cheques, but being a realtor who specializes in meeting the needs of wealthy clients is far more of a grind than an episode of Selling Sunset would have you believe.
“Our agents that are successful work long hours, and they work very diligently to ensure the level of service they deliver is differentiated,” says Sotheby’s International Realty Canada president and CEO Don Kottick. “Sure there are some glamourous aspects to it, but at the end of the day it comes down to a lot of hard work and making sure that you deliver a premium service to all your clients.”
Kottick explains that providing that level of service requires far more than wining and dining elite clientele. Cultivating a strong network and being aligned with a brokerage that can assist in marketing properties internationally are critical factors, making the luxury space a tough nut to crack for new agents.
“The space is obviously not for everybody. I don’t think it’s something you get into when you’re fresh into your career,” says Kottick. “I think you have to learn about the space. You have to understand all the nuances of operating in it.”
The rewards for a successful luxury agent can be immense. But with great rewards often come great risk. The upper-tier of any market is often the first to get pummelled during a downturn, which can leave agents who chase big fish going home with nets full of nothing.
The Sotheby’s report, however, projects that the increased level of the activity seen in $1 million-plus properties should continue, driven by supply shortages and the growing propensity of wealthy international investors to park their money in real estate rather than stocks.
“There definitely has been a trend where people feel their money is much more secure in real estate versus equities. Time will tell, but it looks like that should continue into 2020,” Kottick says, adding that elite luxury agents – those with a solid book of business and a reputation for delivering results – are rarely put off by lagging markets.
“Our top realtors, when the market cools, actually do better than the average realtors out there,” he says. “It doesn’t matter what type of market it is. The really good agents do well regardless.”