luxury homes

What’s Happened To The “Luxury Homes” Of The Market?

Market Statistics

5 minute read

August 19, 2019

I’m going to share the following story, even if it embarrasses one particular person.

This person isn’t identified, so what’s the harm, right? ūüôā

A couple of years ago, a new agent started at our office and she introduced herself and said, “I’m a big fan of your blog.”¬† Not to be guilty of the humble-brag here, but I get that a lot.¬† Agents throughout the GTA are regular blog readers, and I appreciate the feedback.

The first question I ask people when they tell me that they read my blog is usually, “Do you comment?” because I’m waiting for that day when the person reveals him or herself as Kyle, or Condodweller, or Appraiser, or Chris, or, if there’s a God, Chroscklh.

The most common response is actually a throw up of the hands, followed by, “No, oh, wow.¬† God no.¬† I can’t get involved in that.”¬† Believe it or not, people find the comments section intimidating!¬† I met a guy at my gym a couple of years ago who was a 260-pound fireman and told me, “I don’t have the strength to comment, I just don’t.”

So the young lady who joined our brokerage, when I asked, “Do you comment,” said that she does not.¬† I then asked her my second-most uttered question, which is, “How long have you been reading?”

She said, “Hmmm, well, I¬†guess for a year,” and then left her sentence kind of half-finished.

I said, “You guess?”

She smiled and replied, “Well, what I mean is that I’ve been reading for a year, but I’ve read them¬†all.”

“All?” I asked, as though that couldn’t be correct.¬† Only my mother has read all my posts,¬†and¬†has been reading from the start.

The young lady replied, “Yeah, well, when I decided I wanted to go into real estate, I found your blog, and I committed to reading all of them from 2007 onwards.¬† I’ve read them all now.”

I got out my phone and divided 2,000 by 365 and said, “You would have to read 5.5 posts per day, every day, for a year.”

She hmm’d and haw’d, wavered from side-to-side, and said, “Yeah, I mean some days I read like fifteen or twenty, and some days I read like one.¬† So it all evened out.”

I got to know this agent over the next little while, and honestly, she really, truly did read every single post from 2007 to 2017.  It was, on the one hand, a bit weird.  But it was also very industrious, and showed a level of committment that serves a person well in this business.

You know who you are – I miss our chats, and hope you’ve found success at you-know-what brokerage.

One of the things this agent told me was that I don’t “interact” with readers enough, and that I should post more responses to their questions.¬† She also said that when readers ask questions, and/or provide suggestions for future features, I should pay very close attention.

As I wrote during my lengthy response last Wednesday, part of the reason I don’t respond to every comment (like that person that response to¬†every¬†comment on Instagram, even if there are eighty-six of them) is because I respect the readers and the discussions they have, and I don’t want to disrupt their flow.¬† I don’t want to chime in with a “this is why you’re right” or “this is why you’re wrong” like a demigod, so I leave them alone.

One thing I will say is that over the past year, I’ve received a lot of great blog ideas from the readers, and for that, I’m thankful.

One reader on Wednesday provided the following:

Excellent comment!

And it got me thinking: if there were a lot fewer sales for “luxury homes,” and I mean a¬†lot¬†fewer, is it possible that this could skew the data?

We don’t make much of¬†median¬†price, and perhaps for good reason.¬† It’s like¬†average¬†price’s scrawny little brother.

But there seems to be this general consensus that “prices are¬†up” in areas where the data says otherwise, and as the comment above seems to reason, perhaps that’s because the data set is different.

So I set out to look at sales over $2,000,000, which I don’t consider “luxury” but this is the highest segment that TREB Market Watch tracks, and then look for outliers in the data over the past few years.

First, let’s look at how $2M+ sales have factored into the overall sales levels in each month of 2019 thus far:


Not much to analyze here yet.

We have 1,330 sales over $2,000,000, out of 52,707.

That’s 2.5%.

Luxury sales peaked in May both in terms of volume (292) as well as percentage of sales (2.9%).

Not surprisingly, the low-point for both was January at 76 and 1.9% respectively.

Now the obvious next question in mind becomes, “What percentage of $2,000,000 sales are for detached homes?”

Here’s the answer:

The data shows us that 88.2% of all sales over $2,000,000 are for detached houses.  The rest are made up of semi-detached houses, rowhouses, condo townhouses, and condo apartments.

So armed with this data, what do we do?

How do we determine whether this is affecting the market, and possibly “skewing” the data?

Let’s run the same numbers for 2017, and then compare:


The data here is very different!

We’re seeing the numbers almost¬†double¬†across the page.

In terms of sheer volume, we’re at 2,643 sales compared to 1,173.¬† That’s actually¬†more¬†than double.

But volume aside, we see that the number of $2M+ homes makes up a substantially larger percentage of the overall market: 4.3% compared to 2.5%.

In fact, if you recall that the market turned downward after April of 2017, we might have seen May, June, and July numbers even higher.

What I find even more interesting is how detached sales play into this.

Have a look:


In 2019, detached sales represented 88.2% of all sales over $2,000,000.

In 2017, detached sales represented 93.0% of all sales over $2,000,000.

So those who suggest that “the higher-end isn’t moving” are spot-on!

Not only are we seeing fewer sales, but we’re seeing fewer $2M+ sales as a percentage of overall sales, as well as detached sales making up a smaller percentage of those that¬†do¬†sell.¬† That means more and more of the $2M+ sales are for condos, and thus there’s even more evidence that the “higher end” of the freehold market isn’t moving.

While the difference between 88.2% and 93.0% might not sounds significant to you, trust me – it is.

Enough, in fact, to potentially be a reason for the continued on-paper discount in many housing segments, when the feeling in reality is that prices have risen.

Just for good measure, let’s take a look at 2018 as well.¬† We’ll want to know if the numbers look more like 2017, or 2019.

This looks way more similar to 2019 than to 2017.

To review:

2017: 4.3%
2018: 2.7%
2019: 2.5%

The trend from 2018 to 2019 is down, although at 0.2%, it’s as likely to be a rounding error as it is to be a trend.

But it shows us, once again, that “luxury” sales are down substantially since 2017, and with this percentage being down in both 2018, and then in 2019, it only strengthens the argument that fewer luxury home sales has potential to skew the “average home sale” data when comparing to 2017.

As for the sale of detached houses over $2,000,000 as a percentage of all $2,000,000 sales, once again, this looks more like 2018 than 2017:

To review:

2017: 93.0%
2018: 86.2%
2019: 88.2%

Here we see the 2018 figure actually lower than 2019, unlike with the “overall” stats, but again, it only strengthens the argument that the sale of detached homes over $2,000,000 dropped off significantly after 2017.

There is no better measure for the health of a particular segment of the market than sales.

It seems to reason, quite simply, that if sales of $2,000,000+ properties are down, in both absolute terms and relative (as a percentage of sales, since sales vary), then this market segment truly must be, as the reader from Wednesday commented, “not moving.”

One could argue that looking at sale-to-list ratios is also a fair measure, if we’re trying to get that¬†relative picture of the market, but houses are listed and re-listed, over and over as we know.¬† And when it comes to the “top end” of the market, this is even true even more so.

That actually gives me an idea for Wednesday.¬† Have you ever noticed that builders always price homes¬†high and come down in price over time, rather than price¬†low and try to solicit multiple offers like in the resale market?¬† Why is that?¬† I think I might pull some examples from MLS to share with you guys…

Written By David Fleming

David Fleming is the author of Toronto Realty Blog, founded in 2007. He combined his passion for writing and real estate to create a space for honest information and two-way communication in a complex and dynamic market. David is a licensed Broker and the Broker of Record for Bosley – Toronto Realty Group

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  1. Pingback: What‚Äôs Happened To The ‚ÄúTop End‚ÄĚ Of The Market? | Real Estate News Group
  2. Not Harold

    at 9:27 am

    Great numbers on high end market. Maybe you could use your data access and do some actual crunching instead of relying on TREB?

    Not too hard to do some analysis in Excel or Tableau with the raw data.. Your Data Hub is pulling the data so just a few minutes to generate the ratios for >$5MM

    Why don’t developers aim for a bidding war? It depends on the area and their place in the market. A developer who’s hitting 80th percentile in the market (maybe 90th) will be aiming for a bidding war. Someone who’s aiming for 95th to 99th percentile in the local market needs to price high and wait, as there just aren’t enough shoppers in the local market to create a bidding war. If you had a $3MM house in North Rosedale you’d be generating a bidding war. At $6MM +++ you won’t get a bidding war no matter how well done it is. Meanwhile there are areas where $3MM (like Trinity Bellwoods) is far above the high water mark and you have to come in at $1.8MM to create a bidding war.

    It’s just generally hard to do a flip that can hit the upper middle vs the upper upper part of the market. An upper middle target also relies on executing many projects – you’re getting presumably lower absolute profits but relying on higher volume. Can you reliably acquire properties in the right areas at the right prices for this strategy? Can you get enough capital at the right price to run the strategy?

    Many of the drivers for developers encourage them to aim for upper upper segment of their local sub-market, thus to price high and come down is a better pricing method than the bidding war.

  3. Appraiser

    at 10:35 am

    Once again, well done David. Very nice examination and summation on the effects of the “sales-mix.”

    In economic analysis, I believe it’s known as “separating the signal from the noise.”

    Reliance on averages can result in very deceiving conclusions, especially when examining homes sales and it’s innate vagaries. Thus the emergence of the imperfect, yet far more reliable HPI.

    All the while, hard-core sophists (most bears), and small-town hucksters like Garth Turner are still trying to sell the story that detached home prices are falling in T.O. Hilarious.

  4. Professional Shanker

    at 11:13 am

    “Here we see the 2018 figure actually lower than 2019, unlike with the ‚Äúoverall‚ÄĚ stats, but again, it only strengthens the argument that the sale of detached homes over $2,000,000 dropped off significantly after 2017.”

    Perhaps sales of $2m dollar homes (upper end market) in 2019 are in line with their historical average and 2016 & 2017 was just an anomaly?

    I believe sales of detached homes (+$2m) peaked in 2017 and now are reverting to their historical average, likely will be lower unless the lending taps are turned back on.

    1. Jimbo

      at 8:46 pm

      Would you account for inflation? That house that sold for $2 million maybe a similar house sold for $1.8 million the year before?

      1. Professional Shanker

        at 1:22 pm

        That is the inherent flaw of choosing a static number to compare year over year. Perhaps part of the reason there are reduced sales of detached over $2m is because prices in that segment have fallen by over 20% ($2.2m home selling for $1.8m) since 2017?

        Is it possible that price convergence is transpiring across the GTA, a host of factors (lending restrictions, interest rates, foreign capital controls, etc.) have narrowed the affordability range. Less sales of detached homes over $2m is a symptom not a cause of the average price decline of detached.

  5. Marina

    at 11:44 am

    This definitely matches the neighborhood experience. I’ve seen some lovely houses at 2.1-2.5 M that “feel” like they should sell for more but don’t. And the most decrepit semi’s still sell for 1.2+.
    As a semi owner I can’t say I’m sad about it, but at least now the TREB numbers make sense relative to what I’m seeing.

  6. Pingback: Do The Toronto Newspaper Headlines Tell The Whole Story?
  7. Daniel Rose

    at 4:13 am

    Thanks for sharing this information with us! You describe the luxury home, which is very helpful for those people who find luxury homes.

  8. Lili Pirtle

    at 11:23 am

    That reminds me

Pick5 is a weekly series comparing and analyzing five residential properties based on price, style, location, and neighbourhood.

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