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The strength of the $2-million-plus market comes as Toronto home prices continue to soar. TREB said Wednesday the average sale price of a home across the Greater Toronto Area reached $585,204 in May, an 8.5% increase from a year ago.

It was the best May ever for Toronto real estate sales with detached homes in the city proper reaching an average price of $943,055.

Jason Mercer, TREB’s senior manager of market analysis, cautions when it comes to the $2-million-plus market the numbers are still small so it could affect the data.

“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,” says Mr. Mercer, citing record-low interest rates as a factor that continues to drive sales. “That leads to strong price increases because of a tight market.”

David Batori, a 25-year veteran of the industry, says part of what is happening in the market is people with those $1-million homes are selling and moving on to bigger and better houses and driving up prices.

“For $1-million, you don’t even get a bungalow in certain areas,” says Mr. Batori. “I had a client who just sold his house, he thought he would get $1-million, so he bought a $2-million home. He ended selling for $1.4-million. He told me if he knew he was going to get that much, he would have spent $2.5-million [on his new house].”

What are people getting for their $2-million? In Mr. Laszlo’s projects it usually means a brand new home on a lot about 25 feet by 120 feet with about 3,000 square feet of living space. Land prices, land transfer taxes and construction costs have dictated that $2-million figure for any builder hoping to get a 10% profit for what could be a risky venture if the market goes south. The cost of the land alone is usually $1-million.