June marked the fourth consecutive month of record sales on the Toronto Real Estate Board. Residential sales were up 15% over June of last year. For condos, the numbers were even more impressive. Condo sales citywide were up 25% over June of '03. Downtown, condo sales were ahead by 33%. On the Etobicoke Waterfront they were up 18% over June of '03. Skeptics would say that condo sales should be higher given more inventory than last year. But surprisingly, on a year-to-date basis, while Downtown condo sales are up 19%, actual new listings in the same six-month period were 8% below last year! That translates into a sales-to-active listings ratio of 36% - meaning that the condo market slightly favours sellers over buyers. But before we get too many calls from owners who can't sell their condo, let us re-iterate that this market is being driven by 'inventory'. Some types of units are in strong demand and others are in over supply, which lead us to our observation on 'hot' and 'cold' buildings. Previous commentaries focused on 'hot' buildings because the public seemed to focus only on the negative aspects of the condo market. In this commentary we examine sales trends in a 'cold' building.
Sixty-Five Harbour Square is a well-run building with much to offer, from a prime waterfront location to excellent facilities. The problem is that the building caters to empty nesters and the over fifty crowd. Unfortunately today's market is being driven by the under 40-market segment who want new buildings and a more casual environment.
One of the more popular units at Sixty Five is a two-bedroom/two bath unit with parking at just over 1400 square feet. In 2002 these units were selling for an average price of just over $400,000. In 2003 the average sales price was $380,000. In 2004 to date, there have been four sales of this unit from a low of $365,000 to a high of $380,000.
The average price per square foot for these units is juts over $260 when the averages are at $300+. That's incredible value. What we do know is that prices for these units will begin to rise over time. First because empty nesters want bigger units and they should start to come to the market over the next few years. Secondly, all the new condos are being built with smaller-sized units. And none of these condos are being built on the water.
While rental prices are definitely off from their highs of several years ago, owners are not crying for tenants! Well-priced units are attracting multiple offers - something unheard of just six months ago. The Downtown condo rental market continues to absorb over 100 one-bedroom and 60 two-bedroom units each month. An entry-level unit - a studio with no parking can still be had for $1,000. One-bedroom units with parking are being snapped up at $1400. There is a shortage of prime two-bedroom units that start at $1600. Finally, tenants want newer buildings and that's because the majority of renters in this market is still under thirty!