2016 Spring Market Forecast

2016 Spring Forecast Infographic

From the Sotheby's Realty blog:

Vancouver, B.C. (March 3, 2016)
 – Sotheby’s International Realty Canada is forecasting the Greater Toronto Area (GTA) will lead the $1 million-plus residential real estate market into spring 2016, with continued sales gains and further price escalation. Notable growth is also expected for Vancouver’s top-tier residential real estate market, with strong increases anticipated in the $4 million-plus luxury market segment both in Vancouver and the GTA. Key market and macro-economic indicators foreshadow continued stability in Montreal’s luxury real estate market, while price declines are expected to sustain a buyers’ market in Calgary into the spring.

As reported by Sotheby’s International Realty Canada in January 2016, the performance of major Canadian real estate markets diverged in 2015. While sales of real estate over $1 million (condominiums, attached homes and detached single family homes) increased 48%, 46% and 15% year-over-year in the GTA, Vancouver and Montreal respectively, sales volume decreased 41% in Calgary. During this time, luxury real estate sales over $4 million soared in Canada’s two largest real estate markets, with sales volume increasing 67% in Vancouver and 71% in the GTA year-over-year.

Limited inventory, resilient consumer confidence, strong domestic and supplemental international demand, below national average unemployment, and low interest rates are expected to propel positive growth in the GTA and Vancouver. Stability in the Montreal market will lead to consistent sales, while continued economic uncertainty in Calgary will increase available inventory and contribute to declining home prices across the conventional and top-tier markets.

According to Brad Henderson, President and CEO of Sotheby’s International Realty Canada, “Luxury home sales in Toronto and Vancouver will continue to defy gravity this spring. Both markets have the potential for significant gains, and we expect heightened demand and insufficient inventory to drive price escalation and sellers’ market conditions.”

National Highlights:

  • The impact of diminishing prospects for global and national economic growth, including the OECD’s reduction of Canada’s economic growth projection from 2% to 1.4% in February 2016, has varied from market to market. Ontario and British Columbia are projected to lead Canada’s growth in 2016, resulting in strong consumer confidence, increased net migration, and sustained foreign demand in the GTA and Vancouver. Quebec’s steady growth indicators have contributed to market balance in Montreal, while continued instability in the oil and gas sector will challenge consumer confidence in Calgary.
  • The uptick in the national unemployment rate to 7.2% in January 2016 has also translated into divergent implications for metropolitan real estate markets. Below national average unemployment rates of 5.7% in Vancouver and 7.1% in Toronto in January 2016 are positive indicators. Calgary’s unemployment rate, which rose to7.7% resulting from losses in the energy sector, will continue to temper high-end sales.
  • Low inventory and unrelenting demand for top-tier single family homes in the GTA and Vancouver will continue to drive sales volume and prices. Benchmark pricing for detached homes, which rose to $1,061,789 in the City of Toronto, $2,928,800 in Vancouver West and $1,234,100 in Vancouver East in January 2016, will continue its trajectory. The top-tier detached home market will be characterized by fewer days on market, an increasing number of homes sold over list price, and bidding wars.
  • Affordability will be a defining market influence in Vancouver and the GTA as buyers seek alternatives to single family homes. Demand for attached homes and condominiums in the $1 million-plus market is expected to rise. Notably, federal and provincial housing policy introduced in late 2015 and early 2016 aimed at addressing affordability concerns are expected to have a negligible impact on the top-tier real estate market into spring 2016 as strong market fundamentals prevail.
  • The decision by the Bank of Canada to hold the key overnight interest rate at 0.5% in January 2016 along with the expectation that mortgage rates will remain low into the spring will continue to have a positive impact on home sales over $1 million.
  • The weak Canadian dollar has made real estate more attractive to domestic and foreign buyers, however, other market fundamentals have had, and will continue to have greater impact on the $1 million-plus real estate market across Canada into spring 2016


Vancouver is expected to exhibit strong sales in the $1 million-plus real estate market into the spring. Within the first two months of 2016, real estate sales over $1 million increased 23% year-over-year to 771 units as competition amongst buyers intensified. Detached single family home sales over $1 million, saw a 16% increase to 557 units.

Limited supply, strong consumer demand, low interest rates, and international demand largely driven by both end users and investors from mainland China will place upward pressure on prices, and incent bidding wars and contract assignments. While strong performance is anticipated for the condominium and attached home markets, the detached single family home market is expected to continue to lead percentage gains in sales volume, particularly in the market for homes over $4 million in prime neighbourhoods. Affordability is projected to be a critical concern: with other market influences taking precedent, recent policy measures introduced by the provincial government with the February 2016 BC Budget are not expected to dampen the top-tier real estate market in 2016. (Sothebysrealty.ca)

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