AUG/SEPT 2005

SALES COMMENTARY:
July was another excellent month for sales as reported by the Toronto Real Estate Board. Residential sales were 1% higher than July a year ago. August sales are running 5% ahead of last year for the month and on a year-to-date basis, 2005 is now only 2% lower than last year?s record numbers. The condo market looks equally as strong. Overall condo sales were 4% higher in July than those of July ?04. The Downtown condo market matched last year?s record numbers for July. On the Etobicoke Waterfront, sales were up by 15% in July over the same month last year. While summer months are usually slower, there is no slow down to this market!
For some, monthly figures seem like an artificial cut off. Examining year-to -date numbers can reveal more significant trends. In the Downtown condo market, sales are running 1% higher in 2005 than in 2004. What has made prices rise in this market is that new listings are down 7% in the first seven months of 2005 versus 2004. Compare this to the Etobicoke Waterfront. Year-to-date, sales are ahead 3% over 2004 but new listings are up by 17%! No wonder prices have been weaker there than Downtown over the past year. Going forward, we would expect prices in Etobicoke to improve because all of the new condo buildings are now completed and there will be no new supply of units. Conversely, there are a lot of new condo projects completing later this year Downtown. This will put a lot of new condos into the resale market. While sales volumes will remain strong, prices will level off and actually decline for some types of units!
This month we examined sales at 99 Harbour Square ? right on the water with some of the best views. While the building is older, it is well maintained and is very popular with young professionals. Part of the reason is there are predominantly one-bedroom units. While sales in this building have been inconsistent, there are several interesting trends. Looking at the classic west view unit of 758 sq.ft. with balcony and parking, the most recent sale was at $318,000. The highest price for this unit was $325,000 earlier this year. This same unit sold in 2003 for $299,000. However when you look at sales for the identical unit on lower floors (without the same view ? one sold for $291,000 in ?05 and for $288,000 in ?03). On could argue that in this building, higher floors command a premium of $10-20,000 and the premium is increasing over time. Now consider a slightly larger one-bedroom unit of 805 sq.ft. but without a balcony and facing east. A unit sold in late ?04 for $279,000 and the identical unit sold in ?02 for $283,000. Again buyers are prepared to pay a premium for view and balcony over an extra 50 sq.ft. of space! The final note to our analysis is that prices have moved very little over the past four years in this building. Our so-called experts have been telling you that all condo prices have been increasing so fast that we are due for a correction. Where?s the proof? What we can tell you is that this building is undervalued. Going forward we believe units will appreciate here. Even if the rest of the market levels off, this is prime waterfront and there are no more waterfront buildings planned for Toronto.


RENTAL COMMENTARY:
There is still no sign of an oversupply of condo units for rent! In July, Toronto MLS reported almost 200 one and two-bedroom units leased. And the numbers for August are running well ahead of July. The average one-bedroom unit with parking is going for $1400. Owners are also getting 100% of list price on average. Two bedroom units have a wider price range on average. Renters can expect to pay $1800 ?2200 per month. Again most transactions are occurring at 100% of ask price. We are seeing multiple offers on prime properties ?particularly two-bedroom units, so don?t expect to negotiate here!

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