Toronto Real Estate Board sales in May were just over 10,000 units. This was 6% higher than for May in 2010, and marked the first month this year where sales exceeded the same month in 2010. That trend will continue for June. We are looking at 10,000+ sales and June will be the biggest sales month of the year. Furthermore, expect every month for the balance of 2011 to surpass that of 2010. The final year end count will show that 2011 sales are greater than 2010. No one predicted that, except in this Market Report!!
All condo apartment sales in May were just 3% higher than for May in 2010. Downtown condo sales were also ahead by 3%. Unexpectedly, sales in the Etobicoke waterfront were down by 19% from May of 2010. Part of the reason was the introduction of several new pre-construction projects in a market much smaller than downtown. This had a negative impact on the resale market.
However the real brake on the real estate market has not been rising prices, but the lack of listing inventory. Even in the downtown condo market, with the registration of several major condo buildings that has increased product in the resale market, the sale to list ratio has risen from 32% last year to 38% this year!
The problem is that most experts cannot measure rising prices. Just look at the TREB stats for May. The average price for downtown properties west of Yonge St. was $370,000 – the previous May it was $373,000. East of Yonge St., the average was $405,000 and in May of 2010 it was $360,000. Now anyone who knows the market will tell you that prices west of Yonge for similar units are 10% higher than the east side. And buyers can tell you that prices certainly have not fallen over the past twelve months. But that is what the stats say and the experts rely on this information to tell you what to do in real estate! Of course the problem with averages is that if the mix of sales changes over time – one year more expensive properties sell- then the resulting averages are meaningless. And this always happens. That is why this Report only tracks price changes over time for identical or similar units to get a real price change in the market. Unfortunately the experts don’t have access to this information.
In this Report we looked at sales at 21 Carlton St., The Met, a four year old building. It is just steps from the College subway station, and is located between U of T and Ryerson Universities. You can’t find a better building for Generation Y or for investors. The first unit we looked at was a one bedroom plus den with two baths, parking and locker on a high floor. It is 680 sf with a balcony. It sold in 2011 for $407,500. It previously sold in November of 2007 for $330,000. This represented an increase of 24% over 42 months, with a price just under $600 per sf. This is the most popular style of unit in downtown Toronto. The second unit we compared was a two bedroom, two bath unit, with parking and balcony. It is 870 sf. It also sold this year for $469,000 and previously in August of 2008 (before the market correction) for $457,000. You could argue that the person bought the unit in 2008 at the peak of the market- exactly at the wrong time – yet it still increased by $12,000 in 29 months. This unit is now selling for $540. Two points we can make: there is no wrong time to buy, provided you hold the property for at least three years; and over time the price appreciation in Toronto has not been speculative but steady.
The studio market continues to be one of the best segments for investors. In May, 29 units were leased at an average price of $1300. One bedroom units without parking were leasing for $1400. Parking will add another $100 per month. One bedroom plus den units leased for $1600 to $1650 per month with parking. In total, over 400 one bedroom units were leased in May as we enter the seasonal peak of the rental market. Two bedroom units start at $1900 without parking and will average $2400 which includes a den and parking. 150 two bedroom units were leased in May. The rental market is tight – units are staying on the market for 10-15 days on average and investors are getting close to 100% of asking or list price.