April/May Market Report

SALES COMMENTARY: March sales on the Toronto Real Estate Board were up 7% over March of 2013. But the interesting point was that at mid-month, sales in 2014 were just even to last year. But over the last two weeks of the month, sales were 13% ahead of the same period last year. Weather certainly played a role. At the same time, a lack of active listings, 10% lower than last year, has also slowed the market. A survey of our own agents showed that for every listing taken, they had four times as many buyers. Similarly, condo sales were 6% higher this March over March of last year. The downtown condo market underperformed the overall market as sales were 5% lower than in March of 2013. However over the first three months, year-to-date condo sales downtown were still 6% ahead of last year. While there is some concern about an oversupply of active listings, they are up only 5% versus last year. And new listings coming on the market are up just 1% from a year ago. The Etobicoke Waterfront is improving. Sales are up by 20% and active listings are down by 19%. We appear to be hitting a balance in this market which has been weaker than most. Results from the first two weeks of April confirm that the spring market is stronger than last year. Overall sales are 10% higher than a year ago. Condo sales are up by 11%. New listings this year continue to trail those of a year ago by 3% which is still a drag on the market. However the biggest concern is a potential oversupply in the condo market. In March, 32% more condos were sold in the new construction market than on MLS as resales. Investors must believe more than the media in the long term future of a market that will more than double in size within four years. Given that most of the future supply will be smaller units, the strategy for current condo owners is to trade up now to bigger condo units as this is the market segment with the biggest price upside – less availability, with more and more people who want to live downtown no longer able to afford freehold properties. Want to live in the hot Distillery District? This month we look at sales at Pure Spirit Condos at 33 Mill Street. The first unit we looked at was an entry level one bedroom without parking or locker. It measures 565 sf. The unit first sold in 2009 for $320,000 and again in 2011 for $342,000. We have been preaching that prices are flat and this unit sold once more in 2013 for $334,000. Today two similar units are listed on the market at $335,000 and $330,000. At a price of $590/sf, that is right on the market for hip condos with 9 ft ceilings. The second unit we tracked was a two bedroom, two bath condo with parking and locker. It is a corner unit with a balcony and unobstructed views. It also sold three times over the same period: first in 2009 for $475,000, then in 2011 for $494,000 and again in 2013 for $535,000. At 850 sf, that works out to $629/sf . There is also a similar unit on the market listed at $575,000. You can see the trend we talked about above. Bigger units are starting to appreciate faster, at 4% per year. This is the type of unit that will appeal to those shut out of the freehold market. Currently there are 10 units listed for sale in this building out of 378 units. One is a five bedroom penthouse at $2,200,000.   RENTAL COMMENTARY: In the First Quarter of the year, there were just over 2,000 condos rented downtown. This was 18% higher than the rental number last year. Not only is the rental market growing faster than the sales market, it was also double the size of the condo sales market for the same period. There is no doubt that more and more people want to live downtown. The question is: do people rent or buy? If you ask people who own, they will always tell you it is better to buy. But the Government seems determined to turn young people into the Rental Generation. Just my take. In terms of rental rates, the extra supply and the seasonality of the rental market certainly played a role in the softening of prices.  Monthly studio rentals declined by $25 to about $1375 on average. The one bedroom market also declined from $25 to $50 per month. The entry level one bedroom without parking is $1575. The high end of this market – a den and parking is at $1875. The two bedroom market without parking backed off to an average of $2050. The high end of the two bedroom market with parking and a den also declined to just under $2800 per month. Three bedroom units, in short supply, average almost $4,000 per month. The take away from the rental market is that the days-on-market to rent which used to be in the 10-20 day range across all units is now up to 20-30 days.  

Subscribe to our Monthly Market Reports