There appears to be nothing on the horizon that will change the direction of the housing and condo market in Toronto. The Toronto Real Estate Board reported sales in October were up by 7.7% over October of last year. For the first two weeks of November sales were running 8.3% ahead of last year. Tracking the listing market (supply), ‘active’ listings were down 5.7% from a year ago. It suggests that prices can only increase, going into 2015. Also it appears that sales in Toronto proper have been stronger than the 905 region in the latter half of the year. Expect freehold properties in this market to produce significant price gains in the next twelve months./p>
The condo market is showing much better price balance. While overall condo sales were ahead by 6.6% in October over the previous year, the downtown condo market experienced a better performance with sales up by 9.7%. At the same time, ‘active’ condo listings downtown were up by 8.9%. While the condo listing supply continues to grow, it is not outpacing demand. This has allowed condo prices to remain fairly flat. And the price gap between condos and freeholds is now being discussed in the media with the suggestion that more people will now have to live in condos if they want to live downtown (surprise). This change in attitude from a year ago at this time also extends to Millennials who seem more willing to buy than to rent. The ratio of renters to buyers of condos has come down from over 2.5 times to just 1.38 times. The other reason for the drop is seasonality. Last year the number at this time was 1.8 times.
This month we looked at sales at the Vu Condos at 112 George St. (Adelaide and Jarvis) which was completed and registered in 2010. This is a prime downtown location close to St. Lawrence Market. The first unit we looked at was a one bedroom plus den with parking, locker, and balcony at 685 sf. It sold this year for $396,000 at 99% of list. That works out to $578/sf. The same unit sold four years previous, at registration for $335,000. That works out to a price increase of 4% per year. The second unit we compared also sold in 2014. This was a two bedroom, two bath unit with parking and locker. It had 10 ft. ceilings and also had a 240 sf terrace. It sold for $520,000 at 101% of list! At 812 sf, the price was $640/sf. Most units this size sell for $550/sf. That means the buyers paid just over $20,000 in premium for the terrace. This same unit also sold at registration, four years earlier, for $442,000 but without parking. At the time parking could be purchased for $25,000. When you adjust the original price by this amount, the condo appreciated at just 3% per year. Condo fees at just 55 cents/sf/month are very reasonable for a building of this age where the fees include heat, water, CAC, but not hydro. The popularity of the building is reflected in the fact that there are only three units available for sale out of a total of 352 units. The average list price is $600/sf.
We are now entering the slowest period of the rental market. Downtown there were 655 condos leased in October. That number is 37% lower than the peak in August of this year. Seasonality also applies to rents. For tenants, the best time to rent is in November and December. The worst is April (for May) and July and August (for September). At this time of year, landlords are ready to make a deal, rather than have their unit sit empty. The price drop is about $50/month, depending on the unit. The average price for studios dropped by that $50 to $1400 per month. The one bedroom market remained unchanged with the entry level unit still averaging over $1600. The top end of the one bedroom market – a den plus parking is still over $1900. The entry point for the two bedroom market dropped by $100 to $2100 on average. The high end of the two bedroom market which includes a den and parking is up slightly to $3000 per month. The three bedroom market remains in the $3500 to $4,000 range because of the lack of product versus the demand. Because parking spots in new condos are now being sold for $30,000 to $40,000, the rental price for a parking spot is now averaging $200 per month. That is still cheap to rent when you factor in condo fees and property taxes on these parking units.