Sales in May of this year matched those of May in 2002, as reported by the Toronto Real Estate Board. This is the first month in 2003 where sales were not lower than the corresponding month in 2002! Unfortunately condo sales across the City were 11% lower this May than the same month a year ago. There is no doubt that freehold (detached house) sales are the strongest component of the real estate market. But there is good news for the Downtown Condo Market. Sales were only 3% lower in May of 2003 than 2002. Furthermore, 'active listings' Downtown are only 10% higher than a year ago which suggests that we are not about to experience any significant weakness in prices. In fact we would expect the market to be more active this summer than in 2002!
'Timing the Market' may be popular on Bay Street but we would suggest that it has limited value for residential real estate. If you already own and are planning to move, then what you own and what you want to buy will be moving in the same direction. Whether prices are moving up or down, the price spread is the same. The only time it matters is if you are planning to sell out and to move into an old age home! For 'first time' buyers, it?s not just the price, but also the mortgage rate that matters. If you wait for prices to fall and if mortgage rates rise, you could be looking at even bigger monthly payments than now. When you are ready to own, postponing the decision impacts lifestyle issues and that is the primary reason why people like to own. Ownership puts you in control.
This month we examined sales at 550 Queens Quay, a newer building on the waterfront. We focused on a two bedroom, two bath model with parking - 1055 sq.ft. It first sold as a resale in December of 2001 at $262,000 and then again at $297,500 in April of 2002. A similar unit sold in December of 2002 for $318,000. Currently there are two more similar units listed for sale at $344,000 and $379,000. Granted they have both been on the market for over 30 days, which suggests that the selling price will be at least 5% lower than the list price but still above the last sale. The importance of these results is to highlight that this type of unit is probably the most popular unit in the market today. While the price appreciation for this size of unit has slowed, it has not fallen like smaller one bedroom units. These smaller units have experienced price declines by as much as 5% over the last six months.
With an increased supply of condo rental units, it is not surprising that potential tenants have become more selective. However expectations that a salesperson will show them 10 or more units is not in keeping with the economics of the market. The best salespeople don't have that type of time. The selection process can be just as effective in front of a computer viewing the entire inventory of rentals. Rely on your salesperson to find those buildings that suit your lifestyle and to identify those units in your price range. Viewing three or four units is usually sufficient. Understand this is not a long-term investment decision but rather a temporary accommodation strategy. How many $1300 one-bedroom units of 600 sq. ft. does one need to see?