August sales were a record for the month as 7498 residential units changed hands ? up 11% from ?04. September also looks strong. In fact the market is so good that some ?so-called? expert economists are now calling again for a major market correction. In fact these economists have been telling people to rent rather than buy since 2001!! What we do know is that at some time, prices and sales volumes will level off and these experts will be right, but at what price??? We keep telling people that the risk is ?not being in the market?. If you in the market and your property does not appreciate, then what you want to buy next will not have gone up either. But if you rent, and prices keep rising, then where are you? We can tell you that the market looks well balanced for the rest of this year and into early 2006. One of the keys to forecasting a market down turn is to look at ?active listings?. For the total residential market, active listings at the end of August are only 1% higher than last year. The Downtown condo market shows that active listings are actually down 11% from a year ago! When listings flood a market, it is only a matter of time before prices correct. On the other side, Downtown condo sales were up 8% in August versus August of ?04. The Etobicoke Waterfront also continues to strengthen, with August condo sales running some 30% ahead of August ?04.
This month we examined sales at 1055 Bay Street. This is an older condo building that because of its location is extremely popular with both owners and investors. Two units of approximately the same size - just over 900 sq.ft. were tracked. The first unit contained two bedrooms and two baths with parking. It sold In June of this year for $288,000. The very same unit sold in December of 2002 for $257,000. That is only a 12% appreciation over 30 months or just a 4.8% annual increase!! The second unit, although the same size, had only one bedroom and one bath with parking. It sold in September of ?05 for $251,00 and the very same unit sold in October of 2001 for $194,000. The appreciation for this unit was 29% over 47 months or a 7.4% annual increase. The price difference can be partially explained by the second bathroom but the primary reason was floor level and view)! In our comparison, the difference was 14 floors. When we looked at sales of identical units, but on the same floor and taking place at the same time, the price differential was only $2,000. Finally, a price per sq.ft. of approximately $300 in older condo buildings remains the starting point for any price analysis.
August was the busiest rental month in the Downtown market since May. 151 one-bedroom and 71 two-bedroom units were leased. The average price for a one-bedroom with parking was $1495 and without parking was $1350. The market is saying that parking is worth $145 on average per month. Two-bedroom units averaged $1950 per month. What is most revealing is that the average rental is 99-100% of list price. Renters who think they can offer a $100 below asking are just wasting everyone?s time!