Everyone knows this is a record setting year for the Toronto Real Estate Board. July sales were up 26% over the same month last year. Condo apartment sales were up by 30% for July. Downtown, condo sales were running 29% ahead of July '06. Partial results for August indicate another double-digit increase in sales for the month over last year. Year-to-date, sales are now running 13% ahead of '06; and for the Downtown market sales are up by 21%.
But the real question is when will this run end? Not soon! While sales are up from last year, 'active listings' are 8% lower than same time a year ago. Downtown, 'active condo listings' are 24% lower. Trying to predict the peak or bottom of a market is a fool's game. Smart people ride the trend and change when underlying factors change. Right now people are pointing to the weak U.S. real estate market (its over supply of listings) are saying that it surely will surface here, like some sort of virus. The reality is that properties for sale are not easily moved from the U.S. to Canada. The last time we checked, they were still sitting there!! The real concern for our real estate market is whether the weakness in the U.S. housing market and the sub prime mortgage market will impact the overall U.S. economy to any great degree. If it does, then because of Canada's trading relationship with the U.S., it will impact our own economy. And the loss of jobs will then impact our real estate market. However the National Association of Realtors statistics from the U.S. suggest that the bottom of the market may have already been reached in the fourth quarter of 2006. In the second quarter of 2007, home sale prices were up in 97 of the 149 metropolitan areas surveyed from the same period a year ago - that's price gains in 65% of the areas; as opposed to less than 50% of the areas who recorded price increases (as opposed to price declines) in the fourth quarter of 2006. So not all U.S. markets are a disaster.
But back to the Toronto market. This month we looked at sales at 5 Marine Parade Drive on the Etobicoke Waterfront. The Etobicoke condo market has lagged most markets until recently. In the last two months we have seen increased sales activity - up 50% in July over July of '06, and even some multiple offers. Prices over the last few years have been stable until this year. The first unit we looked at was a one-bedroom with parking and a view of the lake. It sold in June of this year for $255,000. The very same unit sold for $225,00 in June of '03 - just a 13% increase in four years. Last year, an identical unit, with less upgrades, sold for $220,000. At 697 sq.ft., the most recent sale was at $365 per sq.f.t. An identical unit also sold this year for $271,000 but it had two parking spots - it appears that the market is about $16,000 for parking. The second unit we looked at was a two-bedroom, two-bath unit with parking and also a view of the lake. It sold in April of this year for 100% of list price at $329,000. At just over 900 sq.ft., that's $365 per sq.f.t. again. The very same unit was sold in August of '05 for $295,000. That's only an 11% increase in 21 months, which is fairly modest in the Toronto market.
The multiple offer scenario has spilled into the rental market. Rents are starting to creep up. July was the busiest rental month of the year. There were 226 one-bedroom units rented. Furnished one-bedroom units averaged $1800 and unfurnished units went for $1500. 107 two-bedroom units were rented at an average price of just over $2100. Days- on-market for all rentals was just 12 days! We can predict that August will be even tighter for people looking for rental accommodation for September 1st.