The Luxe Factor: High-End Homes Defy the Real Estate Downturn
May 30, 2025
By Allwyn Dsouza, Senior Analyst, Research and Insights, REIC/ICI
By Allwyn Dsouza, Senior Analyst, Research and Insights, REIC/ICI
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Canada’s housing market is hitting the brakes after years of frenetic growth – but you wouldn’t know it from the nation’s most exclusive addresses. While rising interest rates and economic uncertainty have cooled mainstream real estate, the luxury residential sector is charting a different course. From Toronto’s Bridle Path mansions to waterfront West Vancouver estates, high-end homes have remained surprisingly resilient amid a broader market downturn. Recent data shows wealthy buyers are still in the game, and luxury prices are holding firm (or even climbing) in many areas. Luxury home sales increased in 75 per cent of the markets (9/12), with eight markets experiencing double-digit percentage increases[1].
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Figure 1.0
Source: REMax
The Resilient Luxury Market Amid a Broader Slump
After a pandemic-era boom, Canada’s overall real estate market has been on a bumpy ride. As the Bank of Canada rapidly hiked interest rates in 2022 to combat soaring inflation, home sales and prices tumbled in many regions in the following years. In fact, from the early 2022 peak to Q1 2025, the national average home price plunged roughly 18%. The number of purchases similarly plummeted, with sales activity in major markets like Toronto, Vancouver, and Calgary dropping by about 41% or more from Q1 2021 to early 2025 as buyers retreated.
After a pandemic-era boom, Canada’s overall real estate market has been on a bumpy ride. As the Bank of Canada rapidly hiked interest rates in 2022 to combat soaring inflation, home sales and prices tumbled in many regions in the following years. In fact, from the early 2022 peak to Q1 2025, the national average home price plunged roughly 18%. The number of purchases similarly plummeted, with sales activity in major markets like Toronto, Vancouver, and Calgary dropping by about 41% or more from Q1 2021 to early 2025 as buyers retreated.
Figure 2.0
Source: CREA
Figure 3.0
Source: CREA
Yet luxury real estate has charted a more upbeat trajectory. Wealthy buyers and sellers have proven less sensitive to the headwinds that sidelined ordinary homebuyers.
This resilience is evident across multiple provinces. Figure 1.0 highlights luxury sales trends in early 2025 for major Canadian markets, revealing a “tale of two markets.” In 9 out of 12 luxury markets examined by RE/MAX Canada, high-end sales were up year-over-year – often by double digits – even though overall sales activity in those regions remained subdued. Notably, smaller and mid-sized markets (with lower price thresholds for what counts as “luxury”) saw some of the biggest jumps in high-end transactions. For example, Saskatoon’s luxury sales doubled (+100%) in Jan–Feb 2025 compared to a year prior, and Edmonton’s million-dollar-plus sales surged nearly 70%. In contrast, Canada’s most expensive markets – Toronto and Vancouver – experienced slight declines in luxury sales volumes, following an initial flurry of activity at the start of 2025 that later cooled amid new economic uncertainties.
Nonetheless, the Greater Toronto Area (GTA) ultra-luxury market for properties over $10 million stood out as one of the nation’s rare real estate strongholds in the first quarter of 2025. While residential real estate sales over $4 million and $1 million saw annual declines of 15% and 29%, transactions over $10 million increased year-over-year.
What explains this remarkable resilience at the top? The strength of the luxury housing market amid a general downturn comes down to a mix of economic forces and behavioral factors unique to high-net-worth individuals.
The Wealth Effect: Why the Rich Keep Buying
A crucial factor buoying luxury real estate is the wealth effect – when affluent people feel financially secure (or even richer) despite broader economic troubles, they’re more inclined to invest in big-ticket items like property. During 2023–2024, even as average Canadians saw budgets squeezed by inflation and interest rates, many wealthy households saw their balance sheets remain robust. Stock markets had a volatile 2022 but rebounded strongly in 2023, boosting the net worth of high-net-worth investors. By early 2025, robust equity performance had restored confidence for luxury buyers in Canada. In other words, the same cohort that drives luxury home sales often benefits from rising asset values (stocks, businesses, etc.), cushioning them from economic dips that hit lower-income groups harder.
Crucially, Canada’s wealthy have also grown in number and resources over the past decade. Even with recent volatility, the concentration of wealth at the top end is near record levels. This has created a steady base of demand for luxury real estate. Many affluent buyers view prime property not just as a home, but as a store of wealth. The “wealth effect” also works in reverse for selling: luxury owners are typically under less financial pressure to offload property. If market conditions aren’t ideal, they can hold on longer (paying carrying costs comfortably), which prevents panic selling and fire-sale price drops at the top end.
According to a report by UBS, Canada had just under two million millionaires at the end of last year. That number is expected to grow to 2.4 million millionaires by 2028, representing 21% growth[2]. According to Oxfam, billionaire wealth in Canada has increased by $113.4 billion in 2024. Since 2019, billionaire wealth grew by $190.3 billion with a new billionaire minted every 12 weeks in Canada[3].
Supply, Demand, and Scarcity in Luxury Housing
The interplay of supply and demand in luxury real estate is distinct from the mass market, and it has contributed greatly to the sector’s resilience. On the supply side, luxury homes are by nature scarce assets – often one-of-a-kind properties in prime locations. During the recent downturn, the supply of high-end homes for sale actually tightened further in some regions. Many would-be sellers at the top end pulled back and adopted a “wait-and-see” stance, reducing inventory. For example, by mid-2024 Toronto’s market saw a large increase in listings above $4 million which helped inventory, but still less than half of those listings actually sold in the first half of the year, indicating many owners were testing the waters rather than desperate to sell[4]. In luxury enclaves, even in cities with more listings, the truly desirable properties (e.g. homes with unique character or ideal location) were few, and new construction of luxury homes slowed (partly because of higher costs and developers’ caution). In fact, tariffs and cost inflation in construction have curbed new high-end development, which will constrain future supply – ultimately supporting the value of existing luxury stock. With fewer luxury properties on the market, competition among buyers remained healthy for the cream-of-the-crop homes, sustaining prices.
On the demand side, high-end real estate has a global and lifestyle appeal that broadens its buyer pool beyond local fundamentals. Canada is seen as a stable, desirable destination, and its luxury market has long drawn interest from international buyers (though a temporary foreign-buyer ban in 2023–24 curtailed some of this).
Lessons from Past Slowdowns: Patterns in Luxury vs. General Market
To understand today’s luxury real estate resilience, it helps to revisit past downturns since 1990 and see how the high-end segment performed relative to the broader market. History rarely repeats exactly, but patterns do emerge.
1990s Recession (Canada): In the early ’90s, a housing bubble burst in Ontario after the Bank of Canada hiked rates above 14%. Home prices dropped ~32% from peak to trough, with Toronto falling 38%. Luxury homes weren’t spared—high carrying costs and economic stress forced some affluent sellers to list. However, prestigious neighborhoods like Rosedale rebounded faster by the late ’90s, as wealth re-accumulated. Vancouver, insulated at the time, showed that local economies matter.
2001 Tech Bust: This U.S.-driven downturn, triggered by the NASDAQ crash, hit the net worth of tech millionaires. Luxury markets like Silicon Valley paused briefly, but low interest rates soon reignited demand. Here, luxury faltered temporarily when equities fell but rebounded quickly due to ultra-loose monetary policy.
2008 Global Financial Crisis: The GFC, driven by subprime mortgage defaults, saw U.S. home prices drop 34%. Luxury was initially insulated—but by 2009, prices dipped 10–15% in global hubs. Canada, with stronger banks and no subprime crisis, saw only ~10% price declines. Vancouver luxury held steady, then surged post-2009 with low rates and foreign capital inflows. The lesson: cash-rich buyers shield luxury early in downturns but aren’t fully immune if recessions deepen.
2015–2017 Regional Shocks: Alberta’s oil collapse led to job losses and falling luxury home prices in Calgary. Meanwhile, Toronto and Vancouver boomed, underscoring how regional economic drivers (energy vs. tech) affect luxury differently. Vancouver’s 2016 foreign buyer tax briefly crashed $3 million+ sales by over 50%, but demand soon rebounded as domestic buyers stepped in. Policy shocks can cool luxury, but don’t erase underlying demand.
COVID-19 (2020): The pandemic initially froze markets, but record-low rates and fiscal stimulus triggered a luxury boom. Remote work and asset gains drove the wealthy to buy larger or vacation homes. Muskoka and Aspen saw bidding wars on multimillion-dollar properties. Unusually, luxury led the post-2020 boom, far outpacing the general market. It showcased how loose monetary conditions can supercharge high-end demand.
2022–2023 Correction: Rate hikes reversed the pandemic boom, but this downturn differed from 2008. Lending had been tighter, equity levels are high, and forced selling is rare. Luxury has seen fewer transactions and modest price dips, but no crisis. Today’s more disciplined lending and financial resilience among the wealthy have changed how downturns play out.
Across these episodes, a few themes repeat:
One notable deviation in this cycle versus some past ones is the sheer strength of luxury prices. In previous downturns (90s, 2008), even luxury saw price declines in real terms. This time, many luxury markets have barely flinched pricewise; some even hit new highs amid a broader slump. This could be a result of an unprecedented concentration of wealth. Income inequality in Canada has hit the highest level ever recorded as wealth becomes increasingly concentrated in fewer hands. The top 20 per cent of Canadians held more than two-thirds of the country's wealth, averaging $3.4 million per household[5].
Will Luxury Real Estate in Canada Stay Resilient Through 2025?
Canada’s luxury real estate market, which has defied broader housing downturns over the past two years, is poised for a more balanced trajectory in the latter half of 2025.
Short-Term Strength
Falling interest rates are expected to revive discretionary buying, especially in Toronto and Vancouver. Inventory remains tight, as high-end owners are reluctant to sell, keeping prices firm in cities like Calgary, Montreal, and Halifax. Wealthy Canadians, buoyed by strong portfolios and interprovincial migration, continue to underpin demand—particularly in more affordable luxury markets.
Emerging Risks
However, the segment may moderate. A sharp stock market correction could dampen the wealth effect and delay purchases. Trade tensions or extended foreign buyer restrictions could chill activity, especially in B.C. Policy shifts—such as new luxury taxes—may also curb appetite. Additionally, overpricing in the ultra-luxury segment risks stagnating sales if buyer expectations and seller pricing remain misaligned.
Outlook
While the luxury market will likely outperform the general housing sector through 2025, expect slower price growth, fewer bidding wars, and more regional variability. However, resilience will likely persist.
The Real Estate Institute of Canada (REIC) empowers professionals to lead with insight, even in niche markets like luxury real estate. As high-end residential properties defy the broader market slowdown, REIC equips its members with data-driven tools to understand trends such as the wealth effect, supply scarcity, and shifting buyer psychology. In a year shaped by interest rate pivots and evolving policy, REIC fosters cross-sector dialogue and professional excellence. Through ethical leadership, advanced education, and national insight, REIC helps real estate practitioners navigate the luxury segment with confidence—and deliver unmatched value to their affluent clientele.
This resilience is evident across multiple provinces. Figure 1.0 highlights luxury sales trends in early 2025 for major Canadian markets, revealing a “tale of two markets.” In 9 out of 12 luxury markets examined by RE/MAX Canada, high-end sales were up year-over-year – often by double digits – even though overall sales activity in those regions remained subdued. Notably, smaller and mid-sized markets (with lower price thresholds for what counts as “luxury”) saw some of the biggest jumps in high-end transactions. For example, Saskatoon’s luxury sales doubled (+100%) in Jan–Feb 2025 compared to a year prior, and Edmonton’s million-dollar-plus sales surged nearly 70%. In contrast, Canada’s most expensive markets – Toronto and Vancouver – experienced slight declines in luxury sales volumes, following an initial flurry of activity at the start of 2025 that later cooled amid new economic uncertainties.
Nonetheless, the Greater Toronto Area (GTA) ultra-luxury market for properties over $10 million stood out as one of the nation’s rare real estate strongholds in the first quarter of 2025. While residential real estate sales over $4 million and $1 million saw annual declines of 15% and 29%, transactions over $10 million increased year-over-year.
What explains this remarkable resilience at the top? The strength of the luxury housing market amid a general downturn comes down to a mix of economic forces and behavioral factors unique to high-net-worth individuals.
The Wealth Effect: Why the Rich Keep Buying
A crucial factor buoying luxury real estate is the wealth effect – when affluent people feel financially secure (or even richer) despite broader economic troubles, they’re more inclined to invest in big-ticket items like property. During 2023–2024, even as average Canadians saw budgets squeezed by inflation and interest rates, many wealthy households saw their balance sheets remain robust. Stock markets had a volatile 2022 but rebounded strongly in 2023, boosting the net worth of high-net-worth investors. By early 2025, robust equity performance had restored confidence for luxury buyers in Canada. In other words, the same cohort that drives luxury home sales often benefits from rising asset values (stocks, businesses, etc.), cushioning them from economic dips that hit lower-income groups harder.
Crucially, Canada’s wealthy have also grown in number and resources over the past decade. Even with recent volatility, the concentration of wealth at the top end is near record levels. This has created a steady base of demand for luxury real estate. Many affluent buyers view prime property not just as a home, but as a store of wealth. The “wealth effect” also works in reverse for selling: luxury owners are typically under less financial pressure to offload property. If market conditions aren’t ideal, they can hold on longer (paying carrying costs comfortably), which prevents panic selling and fire-sale price drops at the top end.
According to a report by UBS, Canada had just under two million millionaires at the end of last year. That number is expected to grow to 2.4 million millionaires by 2028, representing 21% growth[2]. According to Oxfam, billionaire wealth in Canada has increased by $113.4 billion in 2024. Since 2019, billionaire wealth grew by $190.3 billion with a new billionaire minted every 12 weeks in Canada[3].
Supply, Demand, and Scarcity in Luxury Housing
The interplay of supply and demand in luxury real estate is distinct from the mass market, and it has contributed greatly to the sector’s resilience. On the supply side, luxury homes are by nature scarce assets – often one-of-a-kind properties in prime locations. During the recent downturn, the supply of high-end homes for sale actually tightened further in some regions. Many would-be sellers at the top end pulled back and adopted a “wait-and-see” stance, reducing inventory. For example, by mid-2024 Toronto’s market saw a large increase in listings above $4 million which helped inventory, but still less than half of those listings actually sold in the first half of the year, indicating many owners were testing the waters rather than desperate to sell[4]. In luxury enclaves, even in cities with more listings, the truly desirable properties (e.g. homes with unique character or ideal location) were few, and new construction of luxury homes slowed (partly because of higher costs and developers’ caution). In fact, tariffs and cost inflation in construction have curbed new high-end development, which will constrain future supply – ultimately supporting the value of existing luxury stock. With fewer luxury properties on the market, competition among buyers remained healthy for the cream-of-the-crop homes, sustaining prices.
On the demand side, high-end real estate has a global and lifestyle appeal that broadens its buyer pool beyond local fundamentals. Canada is seen as a stable, desirable destination, and its luxury market has long drawn interest from international buyers (though a temporary foreign-buyer ban in 2023–24 curtailed some of this).
Lessons from Past Slowdowns: Patterns in Luxury vs. General Market
To understand today’s luxury real estate resilience, it helps to revisit past downturns since 1990 and see how the high-end segment performed relative to the broader market. History rarely repeats exactly, but patterns do emerge.
1990s Recession (Canada): In the early ’90s, a housing bubble burst in Ontario after the Bank of Canada hiked rates above 14%. Home prices dropped ~32% from peak to trough, with Toronto falling 38%. Luxury homes weren’t spared—high carrying costs and economic stress forced some affluent sellers to list. However, prestigious neighborhoods like Rosedale rebounded faster by the late ’90s, as wealth re-accumulated. Vancouver, insulated at the time, showed that local economies matter.
2001 Tech Bust: This U.S.-driven downturn, triggered by the NASDAQ crash, hit the net worth of tech millionaires. Luxury markets like Silicon Valley paused briefly, but low interest rates soon reignited demand. Here, luxury faltered temporarily when equities fell but rebounded quickly due to ultra-loose monetary policy.
2008 Global Financial Crisis: The GFC, driven by subprime mortgage defaults, saw U.S. home prices drop 34%. Luxury was initially insulated—but by 2009, prices dipped 10–15% in global hubs. Canada, with stronger banks and no subprime crisis, saw only ~10% price declines. Vancouver luxury held steady, then surged post-2009 with low rates and foreign capital inflows. The lesson: cash-rich buyers shield luxury early in downturns but aren’t fully immune if recessions deepen.
2015–2017 Regional Shocks: Alberta’s oil collapse led to job losses and falling luxury home prices in Calgary. Meanwhile, Toronto and Vancouver boomed, underscoring how regional economic drivers (energy vs. tech) affect luxury differently. Vancouver’s 2016 foreign buyer tax briefly crashed $3 million+ sales by over 50%, but demand soon rebounded as domestic buyers stepped in. Policy shocks can cool luxury, but don’t erase underlying demand.
COVID-19 (2020): The pandemic initially froze markets, but record-low rates and fiscal stimulus triggered a luxury boom. Remote work and asset gains drove the wealthy to buy larger or vacation homes. Muskoka and Aspen saw bidding wars on multimillion-dollar properties. Unusually, luxury led the post-2020 boom, far outpacing the general market. It showcased how loose monetary conditions can supercharge high-end demand.
2022–2023 Correction: Rate hikes reversed the pandemic boom, but this downturn differed from 2008. Lending had been tighter, equity levels are high, and forced selling is rare. Luxury has seen fewer transactions and modest price dips, but no crisis. Today’s more disciplined lending and financial resilience among the wealthy have changed how downturns play out.
Across these episodes, a few themes repeat:
- Luxury real estate often falls later and less in downturns, and recovers faster, because of the financial resilience of owners and limited supply.
- Cash and credit access for the wealthy act as buffers in crises (2008 and 2023 showed cash buyers stepping up).
- Global factors (foreign capital, currency flows) can buoy luxury markets even when local factors are weak. (E.g., post-2008, foreign buyers flooded into London; in 2020–21, they poured into Vancouver/Toronto once borders reopened.)
- Policy interventions can temporarily suppress luxury (as seen in Vancouver 2016, China’s capital controls, etc.), but markets adjust if fundamentals remain.
- Unique shocks (like COVID) can create short-term divergences, but typically the pattern reverts: luxury is less volatile and more “horizontal” in corrections, whereas mass market is more “vertical” (bigger swings).
One notable deviation in this cycle versus some past ones is the sheer strength of luxury prices. In previous downturns (90s, 2008), even luxury saw price declines in real terms. This time, many luxury markets have barely flinched pricewise; some even hit new highs amid a broader slump. This could be a result of an unprecedented concentration of wealth. Income inequality in Canada has hit the highest level ever recorded as wealth becomes increasingly concentrated in fewer hands. The top 20 per cent of Canadians held more than two-thirds of the country's wealth, averaging $3.4 million per household[5].
Will Luxury Real Estate in Canada Stay Resilient Through 2025?
Canada’s luxury real estate market, which has defied broader housing downturns over the past two years, is poised for a more balanced trajectory in the latter half of 2025.
Short-Term Strength
Falling interest rates are expected to revive discretionary buying, especially in Toronto and Vancouver. Inventory remains tight, as high-end owners are reluctant to sell, keeping prices firm in cities like Calgary, Montreal, and Halifax. Wealthy Canadians, buoyed by strong portfolios and interprovincial migration, continue to underpin demand—particularly in more affordable luxury markets.
Emerging Risks
However, the segment may moderate. A sharp stock market correction could dampen the wealth effect and delay purchases. Trade tensions or extended foreign buyer restrictions could chill activity, especially in B.C. Policy shifts—such as new luxury taxes—may also curb appetite. Additionally, overpricing in the ultra-luxury segment risks stagnating sales if buyer expectations and seller pricing remain misaligned.
Outlook
While the luxury market will likely outperform the general housing sector through 2025, expect slower price growth, fewer bidding wars, and more regional variability. However, resilience will likely persist.
The Real Estate Institute of Canada (REIC) empowers professionals to lead with insight, even in niche markets like luxury real estate. As high-end residential properties defy the broader market slowdown, REIC equips its members with data-driven tools to understand trends such as the wealth effect, supply scarcity, and shifting buyer psychology. In a year shaped by interest rate pivots and evolving policy, REIC fosters cross-sector dialogue and professional excellence. Through ethical leadership, advanced education, and national insight, REIC helps real estate practitioners navigate the luxury segment with confidence—and deliver unmatched value to their affluent clientele.
[1] https://blog.remax.ca/luxury-real-estate-reportblog.remax.ca/luxury-real-estate-report/
[2] https://www.baystreet.ca/baystreetschool/1236/Number-Of-Millionaires-In-Canada-Rose-4-In-2023-UBS-Report
[3] https://www.oxfam.ca/news/billionaire-wealth-surges-by-2-8-trillion-in-2024-three-times-faster-than-the-year-before-while-the-number-of-people-living-in-poverty-has-barely-changed-since-1990/
[4] mansionglobal.com
[5] https://www150.statcan.gc.ca/n1/daily-quotidien/240717/dq240717a-eng.htm
[2] https://www.baystreet.ca/baystreetschool/1236/Number-Of-Millionaires-In-Canada-Rose-4-In-2023-UBS-Report
[3] https://www.oxfam.ca/news/billionaire-wealth-surges-by-2-8-trillion-in-2024-three-times-faster-than-the-year-before-while-the-number-of-people-living-in-poverty-has-barely-changed-since-1990/
[4] mansionglobal.com
[5] https://www150.statcan.gc.ca/n1/daily-quotidien/240717/dq240717a-eng.htm
Allwyn Dsouza is REIC’s Senior Analyst, Market Research and Insights. He can be reached at [email protected]. Media enquiries can be directed to [email protected]