May sales on the Toronto Real Estate Board were a record for the month and just missed being an all time record. While year-to-date sales are still running 4% below last year, the market is still strong and is on track as many predicted. In the condo market, May sales for 2005 were 9% higher than last May. The Downtown condo market recorded a 5% increase. On the Etobicoke Waterfront, sales were 19% ahead, May over May. And for those few, there were seven condo sales over one million dollars in May of ?05 as compared to just 3 for May last year.
So where are we heading? The market is not about to crash, as some experts want you to believe. In real estate, price bubbles occur when we experience three consecutive years of double digit price increases. Now that has happened in many parts of the U.S. but not in our market. When the pull back occurs south of the border, we may feel some effect here but that will not be until next year at the earliest. When you examine condo sales by building, you will find that prices in ?hot? buildings have increased by 7- 10% per year; whereas ?cold? buildings have experienced annual price increases in the 0-3% range. The key is to find the ?hot? buildings going forward!! That?s where a top condo expert can help.
This month we examined sales in a more established property ? 2269 Lake Shore ? one of the Marina Del Rey buildings on the Etobicoke Waterfront. Because of a significant number of new projects coming to market, prices have not increased as rapidly as the Downtown market. The unit we looked at was a one bedroom with den, two baths, parking and locker. It was on a high floor with great views and was just under 1200 sq.ft. It sold first in June of 2000 for $258,000. The same unit sold again at the end of 2003 for $280,000 and in May of ?04 for $289,000. The average annual increase over the period was just under 3%. The price per sq.ft. is only $246, which is well below new construction. Incidentally, an identical unit just sold in May of this year for $330,000 but it was fully renovated: the point being that owners of units in older buildings need to renovate (just like houses) if they want to earn top dollar.
TREB released its report on the Rental Market covering January to April of this year. Average rental prices in the Downtown market were $1100 for bachelor/studios; $1420 for one bedrooms; and $2200 for two bedrooms. These prices are marginally ahead of last year. What should be of concern to investors of new units coming to market at the end of this year is: what is the time taking to rent out? Historically it is less than 30 days. Last month 125 one-bedroom units were leased Downtown. On a monthly basis this is fairly strong. However there were still 232 available for lease. And the situation will only get better or worse, depending whether you are a tenant or an owner.