A survey by Macdonald Realty has concluded that Metro Vancouver is set to break all records for a fourth consecutive year, with a projected 792 sales this year of homes valued at more than $3 million — up from the 550 luxury sales predicted earlier this year.
The 792 sales would be more than double the 375 sold in 2010 — itself a record — and nearly four times the 2009 sales number of 209.
The 2010 total has already been surpassed, with 384 homes over the $3-million price point sold so far in 2011, according to Macdonald Realty.
There have also been 66 homes over $5 million sold so far, and a predicted 132 over$5 million by the end of the year.
A total of 40 condos over $3 million have so far been sold, including seven over $5 million.
However, the trend partly reflects price increases that have pushed previously cheaper homes over the $3-million luxury home threshold.
“Price points are moving up,” Macdonald Realty vice-president, strategy, Dan Scarrow said in an interview Monday. “Last year, [many] weren’t classified as luxury. They sold for $2.5 million, but now sell for $3.5 million.”
The most expensive home sold so far this year, according to Macdonald Realty, is a Point Grey house at 4791 Belmont that went for $16.8 million, the third most expensive home ever sold in the region.
Scarrow said that while average prices across the region have not risen sharply over last year, that’s not the case for areas greatly impacted by sales of luxury homes, citing Richmond’s 25-per-cent increase over last year.
He said sales of luxury homes are largely driven by Chinese immigrants and investors with plenty of money.
Scarrow said a rapid run-up in prices has some experts warning that it may be unsustainable.
“Historically, price growth has been driven by a combination of higher wages and lower interest rates, but rates are already at historic lows and wage growth is relatively stagnant,” Scarrow said.
Scarrow said the trend is most obvious in the sharp rise in condo prices, noting that 10 years ago not a single condo sold for over $3 million. This year, the number is projected to rise to 80.
Meanwhile, Tsur Somerville, director, centre for urban economics and real estate, Sauder School of Business at the University of B.C., said it’s difficult to imagine that the run-up in luxury home sales is a long-term trend.
“There seems to be a lot of immigration of people from China with a lot of wealth,” said Somerville.
“It’s hard to imagine that we’ll have an ever-increasing number of people from China immigrating with an ever-increasing amount of wealth.”
Somerville said there are other factors at play including, as Sparrow noted, rising prices that push some homes into the luxury market.
Macdonald Realty Vancouver manager Matthew Lee noted that buyers from Europe and the U.S. are willing to pay the high prices as well.
“Globally, Vancouver is still seen as a relatively good bargain.”
Despite the surge in luxury property sales in Metro Vancouver, Macdonald Realty said that isn’t the case for the interior and Vancouver Island, where non-local buyers are generally from Metro Vancouver or Alberta.