FEBRUARY/MARCH 2004

SALES COMMENTARY:
2004 did not start out as most had predicted. Residential sales for January, as reported by the Toronto Real Estate Board, were solid at 4256 units but were 3% lower than January of 2003. The 'bounce up' from December was only 2%. Compare that to last year when January sales 'bounced up by 23%. Overall condo sales were also off by 3%. However Downtown condo sales bucked the trend and were up by 3%. But before we begin to celebrate, it is important to understand that these sales, as a percentage of the active listing base, were just 15% i.e. at current sale rates we have a six month inventory, even if we get no more new listings!! A balanced market should report a ratio in the 25-35% range. Part of the reason for the slow start to the year can be traced to the January weather. Last year, the winter weather did not hit until February. Already we are seeing a pick up in the February numbers as the weather moderates. But most buyers and sellers just want to know where prices are going! Looking at the average condo price Downtown, January this year is 4% higher than January of 2003. But most of you know that we put little faith in these numbers. All it takes is a change in the mix of units sold (and that happens every month) to distort prices. To know what's going on, you have to look at comparable sales of similar units. This month we are examining sales of both one and two bedroom units at 500 Queens Quay. We choose this building because it is well maintained and has the longest sales history of the new buildings on Queens Quay. Also we want to look at what is happening in both the smaller and larger units. A one-bedroom unit, under 700 sq.ft. with parking, sold originally for $192,000 in April of 2002. The same unit sold again for $198,000 in November of 2003. The unit has city and lake views but because it is in a desirable building, it has retained its value. Now compare these results to a two-bedroom unit, over 1200 sq.ft. with parking, upgrades, and prime lake views. Two years ago it sold for $385,000. The same unit sold again for $444,000 in January of this year. A slightly larger unit, but with a 1000 sq.ft. terrace sold for a $100,000 more at the same time! So what is a terrace worth? In a market where prices are moving sideways, there are exceptions and consumers need to know that unique or special properties i.e. views, upgrades, and terraces command premium prices in any market.

RENTAL COMMENTARY:
The rental market picked up in terms of activity, starting in the middle of January. Prices also firmed up. To illustrate: our Company leased out a two-bedroom at City Place at full price - $1800/month. We received three offers! A small one-bedroom (605 sq.ft.) at Waterclub (8 York St.) with no parking but a nice lake view rented for $1200/month - again our Company received two offers and it went at full price! While rents are still down several hundred dollars from their peaks, there is much better certainty for investors - especially the two-bedroom market.

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