JUNE/JULY 2008 MARKET REPORT
May sales on the Toronto Real Estate Board were again lower than the same month last year – down by 16%. At the same time, active listings were 8% higher than a year ago. Condo sales fared better. They were down 9% overall, and off by 10% Downtown from May of 2007. After FIVE MONTHS, let’s put the condo market in perspective by looking at the YEAR TO DATE condo stats. Yes, sales in 2008 are 9% lower than 2007 but listings are up only 2%! At the same time, the days-on-market for solds dropped from 28 days in 2007 to 23 days this year. The sale-to-list-price ratio was 100% in 2007 and is still 100% in 2008!
What does that tell you? Price it right and it will sell. Price it wrong and it will sit. We have a strong and active market in 2008. What we can also tell you: is that while condo prices are higher today than a year ago, they are also lower than January of this year! But what we are hearing from some potential buyers is that a major price correction is around the corner because their financial planner told them so! When we asked, where their financial planner was basing this insight from, all we got was this is the time to buy mutual funds!! So what will trigger a market correction? A price bubble? Not likely as condo prices have only experienced one year of double digit appreciation which was last year. You need three years at least, or a 50+% jump in prices, as was experienced in Western Canada. A significant change in economic factors? While we did not get a further drop in the bank prime, mortgage rates are still at historically low levels. And while the country may be heading into a no growth stage for a couple of quarters, that’s not the case in central Toronto where shoppers on Bloor Street are still plentiful. The one concern is an oversupply of new condos coming to the market, but condo construction has been delayed on a number of projects and the huge completion numbers for 2010 have been pushed out to 2011/2112. So relax!! It’s still a good time to buy, but it could be better, if sellers would be more realistic in their price expectations and buyers not spooked by financial planners.
In this Report, we tracked sales at 909 Bay Street – the Allegro built in 2000. This is one of the top buildings on the street with the most condo sales in Toronto last year! We compared a one bedroom plus den at 786 sq.ft. with parking and balcony. The highest sale price for this unit in 2008 was $390,000. The very same unit sold 12 months earlier for $355,000, or 9.8% more. An identical unit, on a lower floor sold for $359,000 in 2007. This same unit sold in 2006 for $293,000, a 22% increase in price. Prices are now approaching $500 per sq.ft. in this building. We are still forecasting the market to level off at $600 sq.ft. on average for premium buildings Downtown.RENTAL COMMENTARY:
In May, over 190 one bedroom units were leased – the most popular being a one bedroom plus den with parking at an average price of $1600. A one plus one, without parking averaged $1500. Furnished one bedroom’s will go for over $1800. For those who need to know, premiums are still $100 per month for parking and a $100 for a den! There were 85 two bedroom units leased in May. The average was $2000 per month without parking and this increased to $2500 for furnished with parking. The rental market should remain strong to September because of seasonality. Throughout the market, the list to rental price averaged a 100%, leaving not a lot of room to negotiate for potential tenants!