July was another solid sales month. While residential sales of just over 7,000 units were 4% lower than July of last year, year-to-date sales are still ahead of last year?s record numbers. The condo apartment market continues to outperform the overall market. Condo sales were up 2% for July. Downtown, the condo market continued to be strong with sales up 22% over July of last year. There is no doubt that condo sales downtown will be much higher than last year?s record numbers. On the other hand, the Etobicoke Waterfront continues to be flat in both sales and prices.
The majority of condo buyers still want to walk to coffee shops, bars, restaurants and shopping. That is Downtown! Etobicoke is geared to outdoor activities from walking along the beaches to hiking through High Park. It is a quick drive to Downtown and provides easy access to escape the City. That sounds ideal for people contemplating retirement ? not thirty somethings who want to experience the city lifestyle. That said, I don?t see the Etobicoke market taking off for another three years.
While one noted housing economist has already stated that the Toronto condo market is filled with speculators now and we should exit the market, he is the same person who told everyone in 2004 that condo prices would correct by 10% in a matter of months. I expect that he will be out with another forecast in 2008 calling for the same market correction. You know he will be right some day because markets always correct, but my guess is that by that time prices will be significantly higher than today. The problem with his latest forecast is that he does not who and how many speculators there are in this market. Matter fact no one knows. What I do know is that investor buyers are putting down 25% (that?s what developers require to get financing) and they intend to rent out these units and will ride out any market correction. Speculators put very little money down and if they can?t sell within months, they walk away! In fact given today?s market conditions and the relative prices of our condo units to other major cities in the world and to the rest of Canada, I feel strongly that we are still undervalued and see no reason why we will not experience the same type of market next year ? perhaps with a little more product availability as this year our market has suffered from a lack of listings!
This month we examined sales at 550 Front Street West, one of the early ?new loft? construction buildings. Located in the Portland Park Village, it is within walking distance of the Financial District. The first unit we looked at was a two story, two-bedroom model with one bath, parking, and small terrace. It sold first in late 2003 for $287,500. The same unit sold again in 2005 for $320,000 and then in May of 2006 for $361,000. That?s a 25% increase over three years. Nice but not speculative! At just over 1100 sq.ft., the unit is selling for $328 per sq.ft. including parking. We believe that at this stage, the Downtown market can certainly support prices up to $400 per sq.ft. which suggests that units in this building still have room to appreciate further.
July was the busiest month of the year for condo rentals Downtown. Rentals in July are in anticipation of the September 1st start to the school year and to business gearing up after the summer. 189 one-bedroom units were leased in July. 126 included parking and were leased for an average of $1500 ? the average list price was also $1500 and the average unit was on the market for just 14 days! One-bedroom units without parking averaged $1380. There were 82 two-bedroom units leased in July. The average price was $2,000 with an average list price of $2085. The average time on market was 19 days.