Last issue we focused on the new City Land Transfer Tax. Now back to the more mundane analysis of the current condo market. Toronto Real Estate Board Statistics for October showed that sales were up 15% over October of '06. This will definitely be an all-time record year for sales in Toronto. Condos, in case anyone still does not know, have outperformed the market. Overall condo sales were up18% in October over the same month last year. Downtown they were up by 28% and over 30% on the Etobicoke Waterfront. On the other hand, Active Condo Listings Downtown are at just over 600 units - or only a 45-day supply (normal is 90+)! Last year, with lower sales, there were almost 800 Active Listings! We are still in a 'sellers market', however we are starting to see new listings coming to market in the past 10 days as people start planning around the new City Land Transfer Tax, which takes effect in 2008. Undoubtedly this tax will spur sales before the end of this year, and then we will probably experience slower sales at the start of 2008.
In this issue we looked at sales at the Matrix Development, the first two condos built at CityPlace. The buildings, at 361/373 Front St., were an instant success because of price and location. Buyers and Realtors lined up in November of 1999 and they were all sold out in the first weekend. (Does this sound like the line-ups for One Bloor in November of this year? To view my comments on this project, go to www.blogging4condos.com.)
The first unit we tracked was a 750 sq.ft. one bedroom plus den with parking and small balcony. You could have bought it that first weekend for about $170,000. When this unit became registered, it first sold for $250,000. Prices remained flat for the next four years. But in 2007, the same unit was listed for $269,900 and was sold for $292,500 - 108% of list price. You could have bought a slightly larger two-bedroom unit - 873 sq.ft. back in 1999 for just over $200,000 with parking. It sold in 2004 for $276,000 and the identical unit sold again in 2007 for $328,500. 2007 prices range from $377 to $390 per sq.ft. In terms of price appreciation, the original buyers would have earned about 70% in 8 years, or just under 9% per year. It is interesting to note that most of this appreciation occurred between 1999 and 2002, and then over the last 12 months. The rest of the time, prices were relatively flat. The morale here: you need to hold real estate over long periods of time to ensure good returns. Holding for a year or two is always a gamble: you can either get a quick gain or a loss (after expenses).
The late Fall is usually the slowest rental period. In October, 207 one-bedroom units changed hands in the Downtown market. The 77 one-bedroom units with parking averaged $1625 per month, while the 117 without parking averaged $1500. While the market is slower, rental rates are holding firm. For the first time there were more one-bedroom units rented without parking than with parking! Looking at two-bedroom units, 65 were rented for an average price of $2350. There were only 2 three-bedroom units rented in October, at $4250 and $4600 - both above the list price. Even though the market is slower, units, except for three-bedrooms, are taking 13-18 days to rent out.