Toronto-area residents who are having difficulty imagining a red-hot housing market where $1 million is the median price for a single-family detached house might want to take heed of a new benchmark price that is quickly approaching in the Greater Toronto Area’s housing market.

This benchmark is the $2 million dollar price tag that is quickly becoming one of the largest growing price points for single-family detached houses in the GTA’s residential real estate markets. Moreover, recent price data obtained from the Toronto Real Estate Board suggest this price point is here to stay for some time to come.

Looking at the Toronto Housing Market Numbers

The most recent data that support this assertion were posted in July 2014 by the Toronto Real Estate Board that showed there were 642 detached homes sold in the Greater Toronto Area during the first seven months of the year that sold for at least $2 million through its Multiple Listing Service System. While this figure represents only a 2.3 percent portion of all detached home sales recorded during the first seven months of the year, it also represents a 29 percent increase over last year’s results.

The strength in the market for homes valued over $2 million comes as home prices continue to soar in the Greater Toronto Area. This trend continued during July 2014 after the Toronto Real Estate Board announced in August that the average sale price of a home across the Greater Toronto Area increased on a year-to-year basis by 7.5 percent to $550,700. This figure represents one of the highest average sale prices for a home in the GTA in modern history.

Two Factors Are Contributing to the Increase

TREB’s senior manager Jason Mercer explained how the average sale price for Toronto-area homes has continued to increase when he mentioned in an interview:

“There is a clear reason why prices have gone up. Demand is strong but the majority of people looking to purchase a home are still doing it with a mortgage.”

Moreover, Toronto real estate industry veteran David Batori believes many doctors and lawyers who have owned homes worth at least $1 million are starting to sell their homes while searching for bigger and better houses. This behaviour is increasing the price for Toronto-area homes valued over $1 million because it has put heavy demand pressure on existing inventories of Toronto-area homes valued over $1 million.

What Are Toronto-area Home Buyers Getting for $2 million?

Contrary to popular belief, most Toronto-area home buyers who pay $2 million for a detached single-family home are purchasing modest new homes that feature approximately 300 square meters of living space. While these homes are nice, they seem to pale in comparison to the larger and more luxurious homes that could be purchased for the same price in many other Canadian cities.

Nonetheless, many Toronto-area home buyers believe these homes are a good value that offers them the potential for future price appreciation. As a result, it will be interesting to see if the market for Toronto-area homes valued over $2 million can continue to grow in a housing market that must contend with problems with unemployment problems which have plagued Toronto’s recent economic growth.