February/March Market Report
SALES COMMENTARY:Is 2014 starting out just like 2013 in terms of real estate sales? It sure looks like that according to January sales from the Toronto Real Estate Board. Overall sales were down by 2.2%. However condo sales were up by 5.6% this January over January of 2013. But this year there are some important differences! First, the winter so far has really impacted this market. Detached housing sales are down by 6% while the downtown condo market (least impacted by snow) is up by 14%. Before getting too excited about the downtown condo market, it is important to note that condo rentals in January were 2.3 times greater than the number of sales. It seems that the Millennial Generation prefers renting to buying at this stage. Besides weather, the second negative factor was a lack of listings. New listings for January were 17% lower than January of last year, and total active listings were also 16% lower than the same month in 2013. In the latter half of 2013, we conducted a survey of clients renting through our Brokerage and the preliminary results may surprise you. The primary reason for not buying was not a lack of a down payment, or even the belief that renting was cheaper than buying, it was that ‘this is not a good time to buy’! So where do people get these views? It is all media driven. But two things changed beginning in December. First Millenials have started to question the media about their negative views of our real estate market. And secondly, some experts now believe that 2014 will be an OK year – no price correction. What a surprise. Looking at the first two weeks of February, sales were up 1.3% over the same period last year (even with continued bad weather and people staying home to watch the Olympics). We also continue to experience a lack of new listings, down 6% from last year. Our biggest concern for this market is that if we do not get more listings, then prices will increase – particularly in the detached market downtown by 10% this year. In terms of condo prices, we looked at sales at the DNA 2 building at 1005 King West this month. This is probably the most popular building in the area with many different floor plates and two storey units. The first unit we looked at was a one bedroom with parking and locker. It has a balcony, hardwood floors, granite and 9 ft ceilings (what all young buyers crave).It sold in late 2013 for $329,000. The same unit sold three years earlier for $310,000; appreciating at less than 2% per year over the period. The current price is just under $600/sf. The second unit was a two bedroom, two bath unit, also with parking and locker. It has been upgraded but is on a ground floor. This unit also sold in late 2013 for $398,000 and previously in 2010 for $380,000 and in 2007 for $335,000. The annual rate of appreciation for this condo has slowed from 4% per year when new to under 2% per year recently. The price per sf is just $500, partly because it is a ground floor unit and also because it is a larger unit. While price appreciation has slowed along with the overall market, this is still an in-demand building. Out of a total of 229 units in the building, there are only five offered for sale, two of which are sold conditionally. Prices are still unchanged from 2013 but the spring market is yet to arrive. RENTAL COMMENTARY: As we mentioned above, Rental activity outpaced sales activity in the Downtown Condo Market in January. In total there were 569 units rented. Of these, 19 studios were rented for an average price of $1400. Just under 400 one bedroom units were rented. The most popular was the basic one bedroom without parking which averaged $1600. Days on market averaged 24 for this type of unit. The second most popular unit was the one bedroom with den and parking which averaged $1800. The split between one bedrooms, with and without parking, is now 50/50 downtown. With more and more people wanting to live downtown, and with higher rental or real estate prices, residents are prepared to or prefer to give up the car and to walk or use public transportation. Over 150 two bedroom units were rented in January. Rents averaged just over $2,000 per month for the basic two with no parking. Larger units that included a den and parking averaged almost $2800. Rents at this time of year tend to be softer. We expect rents to start to move higher when the Spring Market arrives in April for May rentals.