May was the break through month for sales on the Toronto Real Estate Board. Sales were up by 11% over May of 2013. In fact May sales were the largest on record for the month. The overall condo market recorded a sales increase of 7% and the downtown condo market was up by 8%. A lack of istings continues to be a drag on the overall market. Active listings are 9% lower than May of last year, and new listings for the month were 1% lower. A test of market balance is the ratio of sales for the month divided by new listings for the month. The number for May was 59% which indicates a sellers’ market. A normal market is in the 25-40% range. The downtown condo market, which everyone seems overly concerned with, had an increase of 14% in new listings for the month. The result was that the ratio of sales to new listings for May was 41% for downtown condos. Even this market tends to favor sellers, although it is at the high end of the balanced market range. As we have been saying for several months, the 2014 Market will be determined by June sale numbers. For the first two weeks of June, sales were up by 11% over June of last year. But June of 2013 was not a particularly strong month. At this stage we are forecasting about 10,500 sales for June which would be slightly below May’s numbers. We were looking for June sales to be slightly higher than in May in order to hit a record sales year. The downtown condo market also recorded an 11% increase in sales for mid-June of 2014 over 2013. Usually the condo market peaks one month after the overall market peak. In our next Report we will be looking to forecast TREB sales for the 2014 year. At the start of the year many experts (not us) were predicting condo prices to drop by 3-5% over this year and next. While condo price increases have not kept pace with house price increases, we have seen prices in some buildings (those with 8 ft. ceilings) remain unchanged; condo hotel buildings actually decrease; and prime buildings actually increase by 3-5%. In this issue we looked at the one of the first loft conversions in Toronto – the Candy Factory Lofts at 993 Queen St. West. Built in 1915, it re-opened as a condo in 1999. With exposed brick, wood beams, hardwood flooring, and 12 ft ceilings, it has always been in big demand. It also has underground parking which is unusual for a loft building. All units are large. The first unit we looked at was a one bedroom one bath with parking and locker at 1030 sf. This unit first sold for $330,000 in 2004. It sold again in 2010 for $535,000 and again in mid-2013 for $620,000. The annual appreciation over 9 years was 7%. The last price was just over $600/sf. The second unit we tracked was a two bedroom with den and bath. It too had a locker and parking. This unit at 1660 sf, first sold in 2006 for $597,000; in 2008 $665,000; and in 2013 for $931,000. This unit also appreciated at 7% per year over six and half years. Again the price on the last sale was just over $560/sf. There are 120 units in the building with minimal turnover. There has only been one sale in 2014 at $600/sf and currently there is just one unit for sale. Units in this building all sell within 10 days of listing!
There were almost 1,000 downtown condo rentals in May. That was 5% higher than April. The average rent of a studio moved up $25 to $1375 per month. The one bedroom without parking was the most popular rental type in May. The average rent was $1575. The gap or premium for either parking or a den increased by $150 per month, with the top one bedroom including a den and parking averaging $1850 per month. The two bedroom market again showed rent increases. A two bedroom without parking now averages $2100 per month and top end two bedroom units with a den and parking are now in the $2900 per month range. Days-on-market for units to rent continued to tighten. Last month it was 15-20 days and now we are in the 10-15 day range. More multiple offer scenarios are happening as we approach the summer peak. While there are reasons to rent such as short term needs, changing family circumstances, etc; it is better to buy from a strictly economic basis when you consider a time horizon over four years.