JULY/AUGUST 2008 MARKET REPORT
June's results on the Toronto Real Estate Board continued the downward trend in sales and the upward trend in active listings. Sales were down by 18% from the same month last year while new listings increased by 10%. A sure recipe for prices to level off at a minimum! So don't get fooled by average prices being higher than a year ago. The condo market fared slightly better. Downtown condo sales were lower by 12 % but new listings were up by 17%, partly because the condo market is generally more active over the summer.
The HALF YEAR report card is in! Overall sales are down by 15%. Our forecast is that annual sales for 2008 will be 80,000 units (in 2007 it was 93,000). Sales will also be lower than in 2006, 2005, and 2004!! Prices for detached housing peaked in January. Downtown condo sales in total have slowed as well by 11% but active listings are only up 4%. What has happened is that we now have a two-tier market. The condo market under $350,000 is still very strong. Affordability and the fact that young people are not as 'up tight' about the economy, explains the strong buyer interest in this segment, which still can produce multiple offer scenarios. Also there is strong buyer interest from non-residents who still feel that Toronto condo prices are cheap compared with other major world cities. Unfortunately, those Torontonians over forty seem to fear a possible recession which is creating caution at the high end of the market. Market fundamentals suggest that condo prices are not going down! They are just going sideways for the balance of the year!!! While some may preach doom and gloom, the long term outlook for condos remains strong for those who take a longer perspective.
This month, we focused our attention on one of the original and largest loft conversions - the Merchandise Lofts at 155 Dalhousie. To trace the market over the last three years, we tracked the sale of the very same unit, sold in 2006, 2007, and again this year. The unit, one-bedroom with balcony, parking, and locker, occupies 743 sq ft. It was listed for sale in 2006 at $278,000 and sold for $295,000. In 2007, it was listed at $310,000 and sold for $317,250. This year it was listed for $324,000 and sold for $320,000. In three years the unit appreciated by 8% - hardly inflationary! But compared to the stock market, it may not be so bad! While the unit sold over list price twice in the last two years that is more a reflection of sellers trying to create activity by under pricing as opposed to speculation. The price per sq ft at $430 with parking, or $400 without is hardly something to worry about. Buying a new, prebuilt project at $550 per sq ft without parking is something that would cause concern.
We are now in the peak of the rental season Downtown. Activity is up - over 200 one-bedroom units were leased in June. Rental rates across the board are up about $50 per month on average. A one-bedroom with parking is going for $1550 on average. A one plus one with parking is $1650. A parking spot is still averaging about $100 per month. Bachelor units are starting to hit the market - $1200 without parking and $1300 with parking. Over 110 two-bedroom units were leased, the most popular being with parking, no den, at $2200 per month. There were only 30 furnished units leased last month. A furnished unit will cost from $300 extra per month for a one bedroom up to $700+ for big units. Most rental units lease out in 10 -20 days on market. The average rent-to-list price is still 100%.