As the winter weather improved, so did real estate sales. Sales of residential units increased by 2% in February over February of 2003, as reported by the Toronto real Estate Board. Overall condo sales were up by 1% but the Downtown Condo market was ahead by 16% from February a year ago! Where is that market crash? West End condo sales were equal to last February and the same held true for high-end (over $500,000) condo sales. Early indications for March are that market activity will be even stronger. The fundamentals of a strong market are still in place - low interest rates and people who want to live downtown. But before we get accused of just being biased Realtors, let us make some key points. For most people, buying real estate/a condo is a lifestyle decision, and trying to 'time the market' is something that should be left to the stock market. Certainly there are downturns when there is a speculative spike in prices but this has not happened. There can also be a downturn in prices when there is an oversupply of properties. We are already on record as saying that smaller condo units are at that point, but that larger units or those units with unique features are still maintaining and increasing in value. Also some areas of Toronto are performing better than others - again due to supply. The problem with economists is that they only have access to aggregate real estate statistics. Unlike other products, real estate is fixed in place and size, which makes it a very different product to analyze. On the other hand, we have always stressed the analysis of individual buildings and units.<br>
In this issue we examined sales at 270 Wellington St. W. - the Icon. This is a very popular building with young professionals, given its location in the heart of the Entertainment District and the club scene. We looked at two sizes of units. The first unit was a one plus one bedroom with two baths and parking, at just under 800 sq.ft. with a nice south view. It first sold in February of 2003 at $254,000 and the very same unit sold again at year end for $261,000. Contrast this to a bachelor unit with no parking in the same building at less than 450 sq.ft. The identical units were sold first in 2002 (the market peak to some experts) at $166,000; in March of 2003 at $155,000 and then January of 2004 at $145,000! Even at this lowest price, the bachelor is selling at $320/sq.ft. Compare that to the one+one at $332/sq.ft. which includes parking! What can we learn? Prior to 2002, smaller units always sold for more per sq.ft. Now we are seeing the price/sq.ft. come into line across all sizes. Also, unless you are buying a Penthouse or a unit with a view 'to die for', don't pay more than $325/sq.ft. downtown.
The Toronto Real Estate Board has just published its first ever Rental Report for the 2003 year and the rental rates are quite enlightening. For the Downtown Condo market, the average rental rate for the year for bachelor units was $1100; for one bedrooms $1400; for two bedrooms $2100; and for three bedrooms plus $4400. For experts forecasting the end of the condo rental market, these numbers are quite surprising. Currently the rental market is active with lots of product and renters. The importance of pricing 'at market' is critical or a unit will sit empty.