Designed by the late, great Arthur Erickson, the Ritz-Carlton's 123 luxury residences would surely have been one of the most prestigious addresses in the city. Fully 58 storeys high, the tower featured a dramatic 45-degree twist from foundation to apex, with spectacular views of the city, the Strait of Georgia and the North Shore mountains.

At least, that was the idea. When the global financial crisis hit last fall, the Ritz-Carlton was one of the casualties. Faced with sky-high construction costs, uncertain financing and sluggish sales, the developer halted the project in October. Recently, there's been some buzz about things starting up again after the 2010 Olympics. Until then, it serves as a poignant reminder of the depth of the global financial crisis.

A time to buy?

I asked Ross McCredie about the project when we met for a working lunch late last week. As president and CEO of Sotheby's International Realty Canada, and a 10-year veteran of the industry, he knows full well how tough times have been for anyone buying or selling luxury real estate in Canada. "It was incredible how quickly the market dried up," Mr. McCredie said, shaking his head. "From October of 2008 to the spring of this year, across the country, sales literally stopped."

Since then, however, it's been a different story. "I was surprised at how quickly the market picked up this past spring," he said. "[In Vancouver,] we've sold one home well over $10-million, one at $9.5-million, as well as two in Victoria at $6.8-million and $6.5-million, all in the last six weeks."

Why the dramatic change? Mr. McCredie believes it has everything to do with the psychology of the sellers. "The past year has cut deep into the mindset of many high-net-worth individuals and their families," Mr. McCredie said. "[Many] have decided to dispose of properties they thought they would never sell."

If you're a buyer, this is the kind of mentality you've been waiting for. "In the urban centres, properties over $3-million have a limited number of buyers, and they're taking a great deal more time to sell," Mr. McCredie said. "Often, sellers feel as if they 'missed the market,' and they're panicking somewhat."

If it's a recreational property you're shopping for, the news is equally good.

"Across Canada there are rare opportunities to purchase one-of-a-kind properties at well below assessed values - and often well below replacement cost," Mr. McCredie said. "This is especially true in the recreational markets such as Whistler, waterfront homes in the Okanagan, Muskoka and Mont Tremblant."

Advice for buyers and sellers

Despite his optimism, Mr. McCredie is quick to point out that luxury real estate is far from a "slam dunk," even in this market.

Certainly, great deals are out there, but the rules of real estate still apply: "Location is still the No. 1 driver of value in the upper end of the market," Mr. McCredie said.

At the same time, he points out that buyers are looking for more than just a pretty view.

"The architectural significance of the home is becoming more important. Size has little to do with value, but the actual beauty, quality of construction, and function of a home are key components of establishing a home's value."

Mr. McCredie believes that when it comes to luxury real estate, both buyers and sellers need to think carefully about the investment aspect of their purchase.

"Whenever buying or selling any home - and especially the most expensive home on the block - think about who else would buy it," he said.

As Mr. McCredie points out, building your dream home is all well and good, but your dreams aren't necessarily the same as a potential buyer's.

"People often get carried away building a trophy home for themselves without ever considering the basic fundamentals of real estate," he says.

"As a result, they overbuild for a particular lot or neighbourhood."

As Mr. McCredie candidly explained, such a move is rarely a wise investment decision. "It's a very simple supply-and-demand function," Mr. McCredie said.

"If there are multiple high-net-worth individuals who would want the home, then its value can easily exceed the current market."

As our server brought us the bill, I asked Mr. McCredie where he thinks the luxury market in Canada is headed over the next year.

He reminded me that when it comes to luxury real estate, the market is only one factor in the equation.

"A home's value is always determined by the buyer's ability to believe the home's story," Mr. McCredie said.

"Done poorly, you can sell a home well short of its value. Done well, you can overcome nearly any market."

Thane Stenner is founder of Stenner Investment Partners within GMP Private Client L.P., as well as Managing Director, Private Client. He is also bestselling author of ´True Wealth: an expert guide for high-net-worth individuals (and their advisors). He can be reached at thane.stenner@gmppc.com. The opinions expressed in this article are the opinions of the author and readers should not assume they reflect the opinions or recommendations of GMP Private Client L.P. or its affiliates.