SEPTEMBER/OCTOBER 2004

SALES COMMENTARY:
As the Toronto Real Estate Board reported, August residential sales of 6,743 properties were the most ever for this month and 3% higher than August of last year. We predicted as much in last month's newsletter. But before we get carried away, this figure is 28% lower than the all time record month in June of this year. It is obvious that the real estate market is highly seasonal. The condo apartment market for August was also ahead by 6% over August of last year, but was 19% lower than the peak month this year. Yes condo sales are less seasonal than the overall market. The Downtown condo market was ahead by 7% while in Etobicoke sales were lower by 10% over August of 2003. Sales of high end condos continue to outperform last year. In August of this year there were 28 sales over $500,000 compared to 24 in August of '03. This end of the market is not interest rate sensitive but rather depends on stock market performance and the business economy. While lower priced units will be impacted by rising interest rates (caused by a stronger economy) our prediction is that high priced units will sell even better in 2005. Talking of rising interest rates, many people who are thinking of buying should be moving into the market this Fall to take advantage of an ample supply of listings (up 16% from last year) and to lock in a mortgage rate which will be at least 1-2% lower than next year?s rates.

Fall is also a time where prices tend to be lower than Spring - usually by 2-4%. Speaking of prices, this newsletter examined sales at 39 Parliament St. a loft style building in the Distillery District. A little too east for some, this area is starting to be in demand. Units tend to be larger and more open than what is available in the core. We looked at sales of two types of units. The first is my favourite size of unit - two bedrooms/two baths with parking and balcony at just under a 1000 sq. ft. This unit sold first at the end of 2001 for $212,000. The new owners added hardwood floors with a makeover and sold it for $256,000 a year later. The identical unit sold in 2004 for $269,000. The second unit tracked was a one bedroom plus den and one bath at 865 sq.ft. with parking and balcony. It sold first in December of 2001 at $206,000 and again in November of 2003 for $218,000. A similar unit sold in 2004 for $228,000. Where can you buy a downtown loft with parking at $260/sq.ft.?? While the annual price appreciation has averaged 5% over the last 3 years, my guess is that it will be slightly higher going forward.


RENTAL COMMENTARY:
The rental market for condos has been excellent over the last month. Investors will be pleased to know that units in new buildings are most in demand. The Waterclub project at York and Queens Quay is probably the most popular rental building Downtown. The most requested unit is a one bedroom plus den at $1400-1600 per month (couples have learned that anything smaller is dangerous to a relationship). The rental market tends to go quiet from October through to January so owners should get leased up now at almost any price!

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