MARKET COMMENTARY - SEPTEMBER/OCTOBER 2007
What can you say about this market? August was another record breaking sales month. Residential sales in August were up 15% over August of '06. Active Listings were down by 20% from this time a year ago - signs of an even stronger sellers market with still rising prices. The condo market was even hotter - sales up 22 % overall, and up by 32% Downtown over August of last year. The Etobicoke market also continued its strong resurgence this year with condo sales ahead by 35%. When a normal or balanced market shows a sales-to-listing ratio in the 25-35% range and we are at 90% Downtown, then you know multiple offers are the 'norm' - not the exception. While early September numbers are ahead of '06 for the month, they indicate that the market has slowed or paused from the hectic summer market - you need to work with a salesperson that is in the market everyday - not someone who does three or four deals a year to stay on top of these changes.
Recent press has talked about multiple offers and more specifically the 'phantom' offer. The listing salesperson says there is more than one offer but you don't know for sure because the listing salesperson says to "fax all offers" and you could be competing against yourself by bidding more than you need to. Instead of whining about the market, take control! In most instances, multiple offers should be presented in person by your salesperson. That way you know how many offers you are competing against and you can adjust your offer price accordingly. If the seller is out of town or suffers from health issues that don't allow for 'in person' offers, then the listing salesperson should invite all salespeople with offers to come to their office and they should fax all offers together. That way, you again know how many offers there are, and more importantly, the listing salesperson does not get to see your offer before the seller gets it. Too often a listing salesperson sees the other offers first and then submits their own. Faxing together would eliminate any temptation for the listing salesperson to alter his offer at the last minute. If the listing salesperson is not prepared to accommodate this request, then don't make an offer. Or if you really want the property, don't offer more than the list price!
This month we looked at sales at West Lofts, 833 King Street West - a former perfume factory converted into real lofts, which is what so many young people want. With only 52 units, it is a high demand building in a trendy area. Pre-sales in 1997 were under $200 per sq.ft. In fact you could have bought a 1614 sq.ft. Penthouse for only $269,000. This same unit resold first for $385,000 in 2003. The same unit sold again in 2004 for $425,000 and in 2005 for $450,000. What would it sell for in 2007? Probably over $600,000 if it came to market. A smaller one bedroom loft with parking and locker sold for $321,000 in June of this year - at 108% of list price! The very same unit sold two years ago for $245,000. That 's a price increase of 31% or over 15% per year. Even without a view, the unit is now selling for just over $400 per sq.ft.
August was a hectic month for rentals. Over 200 one-bedroom units and over 100 two-bedroom condo units were leased Downtown. While condo prices have been rising, condo rents have been almost unchanged over the last few years. However rents have started to move up. At the rental bottom, a one-bedroom without parking could be had for $1200. Last month the same one-bedroom without parking went for $1450 on average. When you add parking, the average for August was $1650. Two-bedroom units that averaged about $2000 are now up to $2200. Days-on-market for one-bedroom rentals was just 10 days. You had longer to look if you wanted two-bedrooms. The average time here was 14 days! Renters need to know market rents and they must be prepared to make an offer on the first visit to the unit if they want it!