April was the third month in a row where sales were lower than the same month last year on the Toronto Real Estate Board. Only in January, when buyers were trying to beat the New City Land Transfer Tax, were sales higher than the previous year. It is also safe to say that May's sales will be lower too! In terms of numbers, residential sales were off by 7%. But for the first month, the listing inventory was 18% higher than the same month in '07. That is the telling factor!
Remember that we have always stressed that real estate is not a national market, although it makes for a good story. Real estate is not even regional but is a local market. Unlike other commodities, you cannot 'truck' excess capacity i.e. listings from one market to another. Economists simplistically think that excess bungalows for sale in Brampton will drop the price of penthouse condos in Toronto.
So let's skip the rhetoric and focus on the facts that only we have access to in the Downtown Condo Market. Condo sales were off by 12% - all of it happening in the area east of Yonge Street. In fact west of Yonge and the Etobicoke Waterfront, sales were even with last year. But what Buyers and Sellers need to focus on is the SALE-TO-LISTING RATIO. Last year it was 52% (east of Yonge it was an incredible 96%) and this year it dropped to 46%. Remember that a balanced market runs at 25-35%! While buyers may be in a stronger position than last year, condo sales in April averaged 101% of list price! The message is clear to sellers. Price it right and it will sell. Be greedy and be prepared to sit with all the overpriced listings! Finally, this is still a good real estate market - the fundamentals for the condo market have not changed.
This month we looked at sales in the DNA building at 1005 King St. West which was registered in 2006. DNA is one of the hottest buildings in the trendy King West market, the preferred area for first time buyers. We looked at two one-bedroom units with parking. The first unit, at 645 sq.ft. was sold in December of 2006 for $240,000 and was sold again in April of 2008 for $277,500. Another unit, measuring 650 sq.ft. with parking, was sold in January of '07 for $249,000 and then 12 months later for $279,000. The key points are: prices are averaging $430 per sq.ft. and prices are rising at 12% annually in this building.
People still want to know what an entry level - bachelor unit Downtown goes for - $1100! But the average bachelor unit will rent for $1200+. In the one-bedroom market, over 170 units were leased in April with an average stay on the market of just 15 days! The rental market is picking up. Expect to pay between $1400 and $1500 for a one-bedroom. The two-bedroom market recorded over a 100 rental leases in April, which is a much bigger number than a year ago. Rental rates ranged from a low of
$1850 without parking to a high of $2200+ for parking and a den.Three-bedroom condo apartment rentals are scarce but if you find one, expect to pay $3500+.