February sales results were at best weak, in comparison to January's promising start to the year. Overall sales on the Toronto Real Estate Board were down 15% from February of last year. All condo sales were worse - down 20% from a year ago. The bad weather had a lot to do with the poor sales results. Last winter we had no snow and this winter in February we had several storms. That means buyers would rather 'hunker down' than go out to view properties. Most experts predicting a market correction don't buy this argument. But how do you explain that new listings for February (from sellers) were also down 12% from February of last year?
The Downtown condo market continues to be the hardest hit in terms of sales. Sales in February were off by 30%. Of some consolation, new listings for the month were also 13% lower than for February of 2012. Do condo buyers also not want to venture out in the snow? No! Condo rentals downtown for February exceeded condo sales by 82%! In a normal sales market it is the other way around - sales are usually 50% greater than rentals. The question is not whether there are enough people to live in condos downtown (demand) but whether people want to buy or rent long term?
If weather (say seasonality) is such a big part of the market, March numbers are more encouraging. For the first two weeks of March, overall sales were down by 11% from the same period in 2012. Condo sales were also down, but by only 10%. And the temperatures this year were in the zero range versus 20 degree Celsius last year! While we are not a supporter of average prices, the average condo price this year for Toronto is 2% higher than a year ago - and we know that the average size of a condo is shrinking! So where are these big price drops?
In this Report, we examined sales at the Vu condos, and specifically 112 George St. This is a newer building, registered in 2010, and located at the corner of Jarvis and Adelaide St. East. It is close to the St. Lawrence Market and business core. The first unit we looked at was a one bedroom with den, parking, and locker at 658 sf. It sold in January of 2010 for $335,000. The same unit sold in March of 2012 for $ 380,000 - at full list price. That works out to $575/sf and a price increase of 13% in two years. The second unit, a small two bedroom, two bath with parking and locker also sold in October of 2010 for $388,000. At 795 sf, it sold again in November of 2012 for $400,000 or $505/sf. While this unit was only on the second floor, the primary difference in price per sf was the timing of the sale in 2012. Prices peaked in the spring and declined by about 5% by year end. So are prices still dropping in this building? Currently there are five units for sale out of 350 units - 3 of them have been listed for just a week. Two units on lower floors, also with parking, are priced at $505/sf and $525/sf. A third unit on a high floor with unobstructed 180 degree views is priced at $650/sf. Our opinion is that prices are not going any lower in this building.
February is usually the slowest rental month of the year but rental numbers matched those of January, and as stated above, exceeded sales by 82%. Rental rates for one bedroom units remained unchanged from the previous month, ranging up to $1900 which includes a den and parking. Two bedroom units continue to increase in price. They start at $2250 without parking and can go as high as $3,000 per month with a den and parking included. How tight is the market? The sale to list price ratio is between 99 and 100%, depending on the unit size. In terms of days on market to rent, the average is 14-20 days. In comparison, the average for sales is 28 days. If you think the rental market is tight right now, wait until the peak rental period of May to September!