Market Report May/June 2014
SALES COMMENTARY: It’s hard to believe but at the mid-point in April, sales on the Toronto Real Estate Board were 10% higher than for the same period in 2013. But we ended the month with sales ahead by only 2%. More sobering, April sales were 3% lower than for April of 2012! The condo market mirrored the overall market for April. Condo sales in total were ahead by 3% but were lower in the main downtown market by 2%, and were flat in the Etobicoke market. The major culprit is the lack of prime listings. Active listings are 8% lower than they were in April of last year and the problem is not getting better. New listings for the month were down 5% from April of last year. The only market with more listings is the condo market – 2% more this year than last. What this has also done is to accelerate price increases in the detached house sector by over 5%, year over year, while the condo market has remained fairly flat. The growing price differential will eventually force more people into the condo market. To illustrate our point, you can buy row housing outside the downtown core that needs renovations for about $500/sf or you can buy a fully finished condo in a prime downtown location for the same $500/sf. But for the first two weeks in May, sales are up a significant 19% over the same two week period in 2013. This is the first time that we have seen a sizable jump in year over year sales. Even the condo segment was up by 13%. New listings for the period were unchanged from last year which is also an improvement. But the real test for this market will come from the June sales numbers. Will they be bigger than those of May? That will determine whether sales in 2014 will hit an all time high. (surpassing the record of 2007)! This month we looked at 55 Harbour Square on the Toronto waterfront. The building was constructed in 1980 and features bigger units which tends to make it more popular with an older demographic. The first unit we looked at was a one bedroom with parking and locker at 1052 sf. It sold first in 2009 for $352,000. Recently renovated, it sold in 2013 for $450,000 or an annual increase of 5.5%. That was just $430/sf. A comparable unit on a lower floor is currently listed for $499,000 ($474/sf). The second unit we looked at was a two bedroom with laundry room but only one bath. It also has parking and a locker and measures 1277 sf. It sold in 2009 for $475,000 and after renovations, again in 2014 for $620,000. That is $485/sf. This unit also appreciated at 5.5% per year. The second and only other unit for sale in the building is a two bedroom, two bath unit at $820,000 or $525/sf. We still believe that these units are underpriced to other premium buildings in the downtown market. RENTAL COMMENTARY: April is the start of the rental season with people looking for occupancy from May through September. While there were over 2,000 rentals in the first three months of the year, in April alone there were 950 rentals downtown. Over 50 studio units were leased (the largest number in the last six months) and the average rent dropped slightly to $1350/mo. The one bedroom market saw over 600 rentals. The base one bedroom unit without parking increased slightly to $1600/mo. At the high end, we saw a one bedroom with den and parking averaging just $1800 which is down by $50/mo. This was the most popular unit rented with over 200 rentals in the month. In contrast, the two bedroom market experienced price increases across all units. The two bedroom with parking now averages almost $2400 and the most expensive units with a den remain just under $2800 per month. There were 14 three bedroom units that rented in April for over $4,000/mo. In terms of market tightness, days-on-market for properties rented, has again come down to 15-20 days across all rental types. And we have even experienced some multiple offer scenarios.