October was another record month for residential sales with a year over year increase of 19%. Condo sales were also up this October compared to October of 2001 by 18%. But this is where the similarity ends for the freehold and condo markets. Prices will continue to move higher for houses in existing neighbourhoods because of ongoing demand and limited supply. On the other hand 12,000 new condo units are coming on stream by the end of this year. While demand for condos will remain strong, supply will soon exceed demand and that means prices will level off and even begin to drop for smaller units where most of the new product is situated. To illustrate this point, we looked at October sales Downtown (south of Bloor). While sales were up some 22% in October, this area also had the most new listings of any area on the Toronto Real Estate Board! In fact, new listings for the month were almost double the sales figure. It doesn't take a genius to figure out that vendors who don't begin pricing aggressively will be waiting a long time to sell their units. On the other hand, there are plenty of buyers in this market but they are being choosey. This is the first time in over a year that buyers can find some great buys and this should make the market very active over the winter.
In this issue we looked at sales at 250 Manitoba, Mystic Point, in Etobicoke. We tracked the sales of a one-bedroom loft with parking - 750+ sq.ft. A penthouse unit sold in 2001 for $190,00 and this same unit was sold again this May for $200,000. An increase of 5% over the year. Identical units on lower floors are now being offered for sale at lower prices - a sure sign that the market is turning.
We have noted a modest upturn in rental activity. But prices are still weak. We recently rented a two bedroom with parking at 7 King St. E. (one of the best rental buildings in the City) for $1700. The unit used to rent at over $2000 per month. There will be some increase in activity in January from the corporate market but this will be more than offset by an increasing supply of condo units. Many investors are now getting their notice to occupy their units in those new projects reaching completion. They are now faced with the choice of either renting their units or selling them as quickly as possible. This is good news for tenants and buyers! Investors must now decide whether they want to rent at rates that May not cover their costs and hold for the next three years or sell into the market to lock in their gains.