In terms of percentage increases over the four-month period, Metro Vancouver – where foreign investment has played a major role — lead the way with a 118-per-cent increase, from 343 $2 million-plus homes sold in 2010 to 747 $2 million-plus homes sold in 2011.Despite the assertion in the article title, they don't state the statistical indicators that rising wealth is the explanation. Where were these wealthy people last year this time? Is real wealth up as sharply as the sales?
That was followed by Ottawa (59 per cent), Calgary (51 per cent), Halifax-Dartmouth (27 per cent), Winnipeg (24 per cent), Hamilton-Burlington (13 per cent) and Greater Toronto (nine per cent).
Re/Max noted that the number of millionaires is rising in Canada, and that they’re investing more in real estate.Yeah, inflation alone would make a few more millionaires. And as to Vancouver, GDP actually fell in BC from 2008 to 2009. Did it really go up enough to support this new wealth since then? Or is this wealth not real? Honest economists don't count real estate equity in household wealth calculations, btw. Did you leave it out like good little analysts? From the original report: "Of particular interest, residential real estate holdings have increased among high net worth individuals, as they express a clear preference for tangible assets." Nope, you did not. So you have this ephemeral valuation on property and you are so happy because people can use that valuation to justify having their name on the title of that overvalued property. Got it.
Let's go to the original report and see what they have to say.
Demand for luxury homes intensifies amid rising Canadian and global wealth
“The strength of the upper-end segment continues to defy expectations,” says Elton Ash,Yeah, that's a warning sign. Fundamentals are something you can see and touch. And probably smell too.
“That demand remains largely domestic speaks to the solid underpinnings of the market,It speaks to access to credit. Period. Again, what fundamental changed from last year this time to this year? Anything, anything? Beuller?
“Three key factors—serious equity gains, stock market recovery, and improved economic performance—have been behind the push for luxury housing product across the country,” says Michael Polzler, Executive Vice President, RE/MAX Ontario-Atlantic Canada.Oh that's so cute. Improved economic performance of what, exactly? Is that a dodgy way of saying commodities are high? If it means something else, any data to back that up?
Equity gains as an excuse is an interesting one. Say a family in a 500k house can now sell for 900k and in the meantime have not HELOCed themselves out of existence and have paid down 100k on their own. A bank will happily lend them 600k (because they earn more than last purchase), which puts them in reach of a house priced at 1.1 million. Sounds like a great deal, eh? Right. Until the increased maintenance costs and taxes eat away their monthly budget that is. This move up is a move down into house-poor. Something no realtor will tell them. If this is the "wealth" driver of this report, that's not going to turn out well.