The $1-million real estate question

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This article was published 22/02/2024 (587 days ago), so information in it may no longer be current.

What does $1 million get you in Winnipeg’s real estate market?

A high-end, three-bedroom, three-bathroom home in a new neighbourhood, according to Royal LePage in a company report released Thursday outlining what million-dollar homes look like across Canada.

“Winnipeg… in the million-dollar market, it’s great value,” said Chris Pennycook, a real estate agent with Royal LePage.

City homes carrying that price tag are bigger than the national average — 798 square feet larger — at a typical 2,558 sq. ft.

The market has “grown significantly” over the past five years, added Pennycook, who is among the industry members expecting a local rebound in transaction numbers.

He anticipates some 120 local house sales exceeding $1 million will take place in 2024.

In 2022 — before buyers fully felt a run of interest rate hikes — Winnipeg and its surrounding areas clocked 121 sales in the million-dollar range, by Pennycook’s count.

Last year, amid higher interest rates, Manitoba logged 88 house sales above $1 million, according to the Winnipeg Regional Real Estate Board.

“It takes time for people to adjust their expectations and what they’re going to get and their finances,” Pennycook said. “They’ve (now) adjusted their expectations.”

A decade ago, the price could elicit a 3,500-sq.-ft. house, Pennycook said. “Construction costs have definitely gone up, lot prices have gone up and, therefore, you’re not getting as much house.”

Million-dollar homes are more common, in part, because of higher constructions costs, he added. “Builders can’t build a custom… home for $700,000 anymore. It’s going to be $1 million plus.”

Lanny McInnes, president of the Manitoba Home Builders’ Association, highlighted a 33 per cent increase in labour costs since the start of the COVID-19 pandemic.

Prices on material such as lumber “skyrocketed” and haven’t returned to pre-pandemic rates, he said.

Nationally, construction on a typical 2,400-sq.-ft. home costs $65,000 more now than in 2019, says a survey by the Canadian Home Builders’ Association.

“We’re continuing to see those kinds of price escalations or fluctuations,” McInnes said, pointing to weather and labour challenges disrupting supply chains.

Still, million-dollar home sales consume a sliver of the overall market; just one per cent in 2023, noted Rena Prefontaine, president of the Winnipeg Regional Real Estate Board.

On Wednesday, Royal LePage’s website showcased 40 Manitoba homes for sale at an asking price above $1 million. A seven-bedroom mansion in Winnipeg was listed at $4.79 million.

Eighteen homes sold for more than $2 million from 2020 through 2022, Prefontaine said. Last year, the count was three; at least one in that range has sold thus far in 2024.

Economists predict interest rates will decline this year, which could boost home sales, Prefontaine added.

Meantime, Pennycook said Winnipeg’s million-dollar home market is constricted by a lack of supply.

“This year, so far, with the inventory being low, it really is… a sellers’ market,” he said, adding prices will rise if there’s more demand than supply.

Roughly 5,400 home builds should start this year, keeping in line with 2023, according to MHBA forecasts.

Pennycook said he has worked with former Winnipeg residents who’ve returned to the Manitoba capital amid housing cost crises at larger Canadian cities.

So, too, has Laurie Boudreau, a Winnipeg mortgage broker.

Some of those clients work from home, she said — for $1 million, they can get more space.

However, the million-dollar bracket is no longer exclusive, Laurie added. “Years ago, obviously, only the rich were buying properties of that range.”

Some of her clients have bought million-dollar properties. Often, they’re professionals who have owned two or three houses in the past and made “some very good profit” on property sales, Boudreau said.

For example, an Island Lakes neighbourhood home built in 2002 might have cost $265,000 at the time. The same house might now sell for double or triple the price, Boudreau said.

Clients have also bought million-dollar houses for their multi-generational families; some rent a portion for income, she said.

The average sold price of a detached home in Winnipeg was $396,833 in January, the WRREB’s latest market statistics report shows.

The most popular price range for a detached home was between $325,000 and $349,999 in January; the $550,000 to $599,999 segment trailed closely behind.

Detached home prices increased eight per cent year-over-year, the data show.

Nationally (with Toronto, Vancouver and Montreal prices tilting the numbers), $1 million will net a house with three bedrooms, two bathrooms and 1,760 sq. ft., according to the Royal LePage report.

Vancouver recorded the lowest space — averaging 900 sq. ft. — for that price tag.

gabrielle.piche@winnipegfreepress.com