FEBRUARY/MARCH 2011 MARKET REPORT

Condo Market ReportSALES COMMENTARY: January 2011 sales on the Toronto Real Estate Board were down by 13% from January a year ago. Some will interpret this as a continuing weakness in the market. Others, such as our self, would make the case that the monthly difference has been narrowing from a high of 23% last summer. We are well positioned for the spring market. The downtown condo market was off by only 2% this January versus January of 2010. While active listings on TREB are the same as last year, they are up by 45% for downtown condos. So don't look for condos to appreciate at the same rate as detached housing in prime markets. Looking to February, we expect the sales gap from last year to narrow further to 8%. Sales for the downtown condo market will begin to run ahead of last year. As we stated in our January Forecast, the downtown condo market consists of two components: the resale and pre-construction markets. Last year, pre-construction sales exceeded TREB sales, and as all of these new projects are built and enter the resale market, we are expecting that downtown condo sales on TREB will double in five years. Most experts tell you that current sales are stronger than they predicted because buyers are trying to beat the forecasted rise in interest rates later this year and the tighter mortgages rules being implemented for mid-March. Not true! That's just a guess on their part. The reality is that we have a lot of Generation X and Y buyers who want it now – not later - and they will be able to qualify even if rates move up marginally later this year. So this market will not look like 2010 with a strong first half and a weaker second half to the year! In this Report, we looked at sales at 77 Harbour Square on Queens Quay. This is an older building that still appeals to younger people because of its amenities, upkeep, and great water views. The first unit we tracked was a 615 sf jr. one bedroom with parking and locker. The first sale was in 2000 for $175,000. The same unit sold again in 2007 for $240,000, in 2009 for $270,000 and then in 2010 for $300,000. That represents an average compounded price gain of about 5.5% per year and a current price of just under $500 per sf. The next sized unit is the most popular in the building – a 758 sf, one bedroom with balcony, parking and locker – facing west on a high floor with a water view. It sold in 2003 for $287,000 and again in January of this year for $410,000 in two days. This unit appreciated again at about 5.5 per cent and because of the higher floor, and balcony sold for $540 per sf. The final unit we looked at also sold in January of this year. It was a two bedroom with parking and locker on a high floor but no balcony and only a city view. Newly renovated, it sold for $580,000 or over $600 per sf. When you factor in inflation, prices in this, one of the most desired buildings in downtown Toronto, are only rising by 3% per year which economists will tell you are sustainable in the long term. So where is the real estate price bubble?? RENTAL COMMENTARY: January was a busy rental period with more units than normal being leased. There were 27 bachelors, 248 one bedroom units, and 130 two bedroom units leased. Bachelors started at $1250 on average without parking to $1325 with parking. One bedroom units ranged from $1450 without parking to a high of $1650 with parking and a den on average. A den adds another $100 to $150 per month to the rent. Two bedroom units started at $1850 without parking to a high of $2200 for a den and parking. Overall, rents have moved up $25 -50 per month across all units since November.

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