SALES COMMENTARY
The Toronto real estate market has peaked in terms of sales and prices! That’s not necessarily bad news. We are going to see a more balanced market going forward – not a major correction as doomsayers keep predicting. The economy is not heading into a recession but coming out of one. The fear of the HST and rising interest rates are probably overblown. The biggest factor impacting our market will be the supply of listings!
In May, TREB residential sales were down 1% from May of last year and were lower than in April. For the overall condo market, sales were 2% higher than a year ago. But when you look at downtown condos, sales were even better – 12% higher than the same month last year. As we have said previously, the condo market tends to lag the overall market by a month or two on a seasonal basis. In 2009, June was the largest sales month on TREB. Expect sales in June 2010 to be lower than May – about 9,300 units and almost 15% lower than June of last year. On a positive note, at the half year mark, year-to-date sales for 2010 will be 52,000 units as compared to 42,000 last year. Timing is everything.
That being said, there are many things to like about this market and particularly our downtown condo market. There are still lots of buyers but they now have more product to choose from. For condos that sold, days-on-market were just 18 and they sold at 99% of list price. On the other side, the sale-to-list ratio has dropped to just over 30%. Sellers take note. Pricing your property at market is critical. And prices today will be higher than what you will receive later this year. As we forecast at the start of the year, new condo projects being registered from now to year end at Concord City Place, Maple Leaf Square, and West Harbour City will bring even more condo listings to this market. And there are small projects too!
This month we looked at sales at 35 Mariner Terrace, part of the Concord City Place Development. The building includes 30,000 sf of recreational facilities shared with 5 Mariner Terrace. The first unit we tracked was a one bedroom plus den with parking, locker, and balcony. At 665 sf, it sold in September of 2008 for $290,000 (the previous market peak) and then again in January of this year for $337,000. This was a 16% increase, after taking into account the drop in prices from late fall of 2008 into the first half of 2009. The second unit we looked at was also a one bedroom plus den with parking, locker, and balcony on a higher floor. This corner unit was slightly larger at 733 sf. It sold in December of 2008 for $309,000 and then again in February of this year for $356,000 – an increase of 15% in 15 months! Prices for both units are in the $500 per sf range (with parking) which has become the norm for newer resale condo buildings. What is attractive about this building are the condo fees. They are about 50 cents per sf per month and that includes all utilities except cable. Going forward, condo fees will become even more important in the pricing of properties. Bigger developments with more units tend to have lower fees. Most new projects are now being built with condo fees that do not include utilities. Generally speaking higher condo fees tend to reduce prices in specific buildings and buyers need to factor this into their buying decisions.
RENTAL COMMENTARY
The rental market has also been inundated with new listings over the past few months. Expect that trend to continue even though we are entering the busiest rental period of the year. Rental rates are anywhere from $50-100 lower per month from the start of the year. There have even been some sightings of small one bedroom units without parking going for $1150. Investors renewing tenants this year should not be increasing rents but simply maintaining them at current levels.
