As 2006 draws to a close, the market remains strong and the year will be remembered as an excellent one for real estate. However, as mentioned in last month?s report, this market is changing. Sales volumes are lower and listings are up. In October, residential sales were 4% lower than October of ?05, while new listings for the month were up by 5% over last year. Preliminary numbers for November indicate a similar story.
But the condo market continues to surprise and outperform the freehold or detached house market. In October, condo sales were 7.8% higher than a year ago. Downtown, the numbers were even better ? sales ahead by 13.2%. New listings increased by only 8.6% (as new condo developments get registered and some investors sell into the market). The end result is that the sales-to-listing ratio has moved back over 40%. While most so-called experts said that the condo market involves the greatest risk, it has proven to be the most resilient. Going forward, the most ?at risk? properties will be those over a million dollars, not condos selling for $250,000! Next month, we will give you the complete story in our Annual Condo Forecast for 2007.
This month, we looked at sales at the Pantages Tower, 210 Victoria Street. One of our readers suggested that we look at a condo building east of Yonge, which in terms of the Downtown divide probably has less appeal. Comparable properties tend to sell for less on the East side (C08 to insiders) than west of Yonge (C01). On the other hand, the sales-to-listing ratio in C08 is always 10% higher than in C01 and days-on-market is always lower. While this may suggest that C08 is the hotter market, the underlying reason for superior sales performance is that there are considerably more new developments in C01 than C08, and hence more product availability.
The appeal of Pantages is the location: hotel, subway, Eaton Centre, and theatre. A two-bedroom, two-bath unit at just over a 1,000 sq.ft.with parking sold in the summer of 2006 for $360,000. The very same unit sold in 2004 for $339,900. That represents an increase of 6% over two years! The price per sq.ft. is only $350 including parking. A small one-bedroom, one-bath unit at just over 600 sq.ft. without parking sold this summer for $232,000. The identical unit sold in 2004 for $195,000. That translates into an increase of 18% over two years and a price per sq.ft. of $368 without parking. Why is the smaller unit more expensive? That?s because this building is very popular with investors who tend to favour small units because of the rental structure and the popularity of the location for renting.
The rental market has also slowed down, primarily because of seasonal factors. The market will pick up in January in response to corporate transfers. In October 88 one-bedroom units were leased at an average rent of $1500 ? 100% of asking price. There were 53 two-bedroom rentals at an average price of $2100 ? 99% of asking. Days-on-market also moved up to 21. And for those people looking for three bedrooms, there is virtually no market! A stacked townhouse went for $3,000 and there are currently no units available. Did any one mention two bedrooms plus a den?