The Toronto Real Estate Board had another record month for June with sales of 10,451 residential units - 20% higher than June of last year and 600 units off from the all time record set last month. We are currently running 11% higher than 2006 on a year-to-date basis. July will be another month that will run well ahead of last year's numbers. A number of factors have contributed to this strong run. The rise in the bank prime interest rate, with the expectation of a second quarter point increase to come, has pushed people into the market that were procrastinating.
A second factor might have been the proposed Toronto Land Transfer Tax. That has now been postponed for review in October. What made the discussion ludicrous from Mayor Miller was the fact that he claimed Toronto property taxes were already too high and hence the Municipality needed alternative tax revenues. What is a Land Transfer Tax if not another form of property taxation? If people move every 4-7 years then people will be simply paying in lump sums as opposed to annually. The real problem is that Toronto residential property taxes at .852% of assessed value are the lowest in the GTA! In comparison, Richmond Hill is 1.023%, Mississauga is 1.003% and Pickering is 1.352%. Even if property taxes are increased by 6-7% as the Budget Chief is threatening, they will still be the lowest in the GTA!! And Torontonians receive more services than other municipalities in the GTA. So let's bring some sense to the debate. We don't disagree that Toronto could use a 1% sales tax, provided that the other two levels of government would reduce their take by a half a percentage each.
Back to the market. Yes condos will continue to outperform the overall market. Sales were ahead by 23% in June versus same month a year ago. Downtown the market was even hotter with sales ahead by 29% and a sales-to-listing ratio over 75%. That means over 75% of the condos available for sale in the month sold within the month! A normal market is 25-35%.
And with prices for condos rising by 15% this year, it means assessment levels will be going up by the same amount; and there Mr. Miller is your revenue increase!
Rather than tracking prices for a particular condo building this month, we focused on the cost of condos on a per sq.ft. basis. When we first started tracking prices in 1999, resale condos could be purchased for $225-250 per sq.ft. and new developments were being sold for less than $300. Today, some 8 years later, resale prices are $325-350 and new developments are $400 -450 with premium projects selling for more than $500. The average increase over this period is about 50%, but 15% of it has come in the last six months! What does the future hold? You can bet there will be no slow down for the balance of this year! And with a tight supply of product, look for another strong market next year and further price increases.
This is a busy time of year for rentals. In June 186 one-bedroom and 109 two-bedroom units were rented out Downtown. One-bedroom units with parking averaged $1550 versus $1400 without. One-bedroom with two washrooms (usually know as a one plus den) averaged $1700 versus $1550 for a smaller one-bath unit with parking. On average you pay $150 per month for parking or you can pay $150 for an extra bath and den per month! Two-bedroom units averaged $2200. In case you were wondering in this market, the actual rental price to list price was 100% for both two and one-bedroom units.