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Rags to Riches to Real Estate |
Nouveau riche, not old money driving high-end home sales,
Royal LePage report
TORONTO, May 15, 2007 – Source: Royal LePage Real Estate Services
Good old-fashioned hard work, not birthright, is the key to unlocking fortune and the front door of a new luxury home, according to the 2007 Carriage Trade Luxury Properties Report released today by Royal LePage Real Estate Services. Given that the unit sales of high-end homes in almost all cities surveyed increased significantly year-over-year, Canadians appear to be working harder than ever.
According to the 2007 Carriage Trade Luxury Properties Poll (conducted by Ipsos Reid), of high net worth Canadians, almost half (46%) cite hard work as the main driver to attaining wealth, followed by the drive to succeed (27%) and a higher education (18%). Only four per cent (4%) of respondents chalk their success and their financial stability to being born into the right family, while a mere one per cent (1%) attribute it to plain old luck.
The 2007 Carriage Trade Luxury Properties Report includes a market analysis of trends and activity in eight major cities across Canada, combined with a national Ipsos Reid poll that measures attitudes, upbringing and beliefs of high net worth Canadians, as defined as individuals with assets of at least $250,000 (excluding real estate) and a primary residence valued at a minimum of $500,000.
Regional variances were observed across the country with the largest increase in unit sales occurring in the nation’s capital, Ottawa, followed by energy-rich Alberta, as measured by local real estate boards. Increases of more than 200 per cent in Ottawa are due to a large pool of international buyers and local executives and professionals. The number of high-end home sales rose by 71 per cent in Edmonton and 38 per cent in Calgary, fuelled largely by in-migration of executives in the oil and gas sector, as well as homeowners trading up.
"Luxury living is no longer the exclusive domain of a few. Buoyant economic conditions and confidence in the market going forward have ignited a growing passion for investing in luxury property among an increasing number of Canadian families. Consequently, homes in this market niche have been trading briskly, and this has put upward pressure on prices,” said Phil Soper, president and CEO, Royal LePage Real Estate Services. “The poll findings reveal that real estate in the Carriage Trade market is both sought after and attainable for hard working people across the country."
Rags to Riches
Rags to riches stories are being played out in the kitchens of some of Canada’s best neighbourhoods. The poll results revealed that the majority of the high net worth individuals surveyed started from modest beginnings. When asked, "What was your economic status growing up?" only three per cent (3%) of respondents reported they were raised in wealthy/affluent households, while 79 per cent of respondents came from lower middle class and middle class upbringings. Four per cent (4%) of wealthy homeowners have risen out of poverty and now live in a home worth at least $500,000.
Home Sweet Homes
When it comes to the value of primary residences, 12 per cent of high net worth Canadians live in homes with price tags starting at $1 million, while almost half (47%) of respondents live in properties valued from $600,000 to $999,000.
Added Soper: "Prosperous Canadians see real estate as an important element in their investment portfolios. Demand for well-appointed properties remains strong with a trend of affluent Canadians owning more than one home. In fact, one-quarter (25%) of wealthy homeowners own two properties, and six per cent (6%) own three residences while two per cent (2%) own more than five properties."
Success seems to transcend sectors with luxury property owners citing a spectrum of occupations including entrepreneurs (13%), CEOs and senior executives (10%), medicine (10%), sales (7%) and law (3%). The poll found that 32 per cent of high net worth homeowners have already retired and can now enjoy the fruits of their labour.
Report Finding
| Luxury Home Market Summary |
Market |
Price |
Units Sold
Q1 2007 |
Units Sold
Q1 2006 |
%
Change |
Halifax |
$600,000 + |
8 |
10 |
-20% |
Montreal |
$900,000 + |
56 |
49 |
14% |
Ottawa |
$750,000 + |
23 |
7 |
229% |
Greater Toronto |
$1,000,000 + |
434 |
357 |
22% |
Winnipeg |
$500,000 + |
11 |
8 |
38% |
Calgary |
$1,000,000 + |
130 |
94 |
38% |
Edmonton |
$950,000 + |
12 |
7 |
71% |
Greater Vancouver |
$1,000,000 + |
673 |
544 |
24% |
Source: Data obtained from various real estate boards (REBGV, CREB, EREB, WREB, TREB, OREB, GMREB and NSAR)
Note: The price categories listed above correlate to the price criteria for a Carriage Trade home. Carriage Trade is a Royal LePage distinction for the most exceptional homes on the market. In Toronto, Vancouver, Montreal and Calgary, the home’s listing price must also be no less than four times the average residential sales price as determined by the local real estate board, or $1million. For homes located in all other markets the home’s listing price must be three times greater than the average residential price as determined by the local real estate board.
Regional Summary
In Ottawa, about a third of all buyers in the luxury market are from overseas. The city’s unique combination of having the cultural, sports and entertainment attractions of a large city, as well as a relaxed, almost small town feel has attracted many international buyers. Many of these buyers are senior executives transplanted to Ottawa, while others have discovered the city through their travels and are drawn to the city’s features and attractions. The typical luxury homebuyer is between the ages of 45 and 58 and is a highly successful professional or executive. Sales of luxury homes in Ottawa priced over $750,000 more than tripled in the first quarter of 2007 compared to the same period last year, and this trend of strong growth is expected to continue for the rest of the year.
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