Almost half way through 2007 and this will be another record year for real estate sales on the Toronto Real Estate Board. And no one predicted it - not even this Company! May was an all-time record month with 11,146 sales, which were 18% higher than for May of '06. June is already tracking for another double-digit sales increase over 2006. On a year-to-date basis, sales are running 10% above those of last year. Condos are performing slightly better than the overall market. In June, overall condo sales were up by 20%, while Downtown condo sales were ahead by 21%.
Last month's report talked about the chances of a market correction in the short term - and there is still nothing on the radar. You can see a correction coming - a slowing of sales, prices still rising at above average rates and a growing supply of listings. But sales volumes are still increasing. Prices are rising at above average rates but that's because there is still a shortage of listings in relation to the number of buyers. Experts, desperate to get their market correction, are now saying that a forecast of rising interest rates will dampen demand by buyers. In part, they are right. Some people on fixed incomes can be eliminated from the market. But why is the Government raising interest rates? It's because the economy is too strong - there are more jobs, people are making more money, and inflation is creeping back. Seems to me that more jobs, bigger pay cheques, and the fact that future housing will cost more to build are not factors that would cause the resale market to experience a price correction!!
To illustrate the explosive price growth in the condo market this year, we looked at sales in 99 Harbour Square on the waterfront. This is an older but very popular building with great water views. The latest sale of a one-bedroom unit (758 sq.ft. with parking) on a high floor occurred in June. It attracted 12 offers and sold for $383,000 - $34,000 over the list price. That's $505 per sq.ft. The previous sale of an identical unit on a high floor took place in January and it sold for $325,000. In the previous three years these units sold for just under $300,000 with little price movement. On the other hand, a slightly smaller one-bedroom unit (692 sq. f.t.) facing north (city view) with no parking sold in May of this year at $255,000 - $5,000 over list price. The identical unit without parking sold last year for $234,000. In 2002 (that's five years ago), these units were selling for $220,000. You get the point!
The Toronto Real Estate Board just released their Rental Market Report for the first four months of 2007. Rental activity overall was up 14% over the same period in 2006. The most active area called C01 (Bloor to the water and west of Yonge Street) experienced a 41% increase in rentals over the same period. If you include the area east of Yonge, the downtown rental market is now 37% of the total condo apartment rental market for the whole GTA. More than 60% of the units rented downtown were one-bedroom units at an average rent of just under $1500. Studios or bachelor units made up only 4% at an average price of $1150. Two-bedroom units went for $2150 on average. And there were only 2 three-bedroom condo apartment units rented during the entire period.