MAY/JUNE MARKET REPORT 2009
The real estate market has defied the experts again. In April, residential sales on the Toronto Real Estate Board were only 7% lower than in April of ’08. Sales increased by 31% from March to April. Preliminary numbers for the first half of May show that sales are running 3% higher than May of last year. Are we all the way back? No! When you look at annual sales numbers, 2008 at 74,000 units was the same as in 2002. We forecast that 2009 sales would reach 70,000 units – the experts were forecasting 60,000. What we do know, based on future population growth, is that these sales numbers represent the bottoming of the market.
When we look at condo sales in total, the sales decline from April ’09 to April ’08 was 12%. However, most of the decline was in the ‘905’ area. On the Etobicoke Waterfront, sales in April were even with April a year ago. But Downtown, condo sales were 12% HIGHER this April than in April of 2008! When you look at these sales more closely, condo sales under $400,000 were up by 18%, while sales above $400,000 were down by 9% compared to April a year ago. The market is shifting to First Time Buyers – young people – who are not concerned about short term economic issues and who realize that current low mortgage rates make owning more affordable than in the last ten years! The other group who should be selling is Move Up Buyers. Not only are mortgage rates at record lows, but higher priced homes have declined in value more than entry level properties which are basically unchanged in price.
The only negative to this market is that First Time Buyers must be prepared to put up with multiple offer scenarios. Remember what we advised back in February – buy now and avoid the rush! And with prices again creeping up, one would have bought at the bottom of the market. Speaking of prices, we have analyzed sales at 600 Queens Quay, an entry level building for people who want to live on the Toronto Waterfront. The first unit we tracked was a 666 sq.ft. one bedroom with balcony, parking, and locker. And for water lovers, it has unobstructed lake views. This unit actually sold five times from 2000 until its last sale in March of 2009. It is rare that the same unit has changed hands so frequently and so this give s us a true picture of how the condo market has evolved over the last 9 years. Sale prices for the period are: $229,000 in 2000; $255,000 in 2002; $262,000 in 2004; $279,000 in 2006, and finally $315,000 in 2009. The cumulative increase was 38% over 9 years or an average annual increase of 4.2%! No exactly a speculative price bubble. The unit’s current price is $473 per sq.ft. with parking, or $450 without. If this unit did not have prime water views, then the price would be in the $375 per sq.ft. range.
In April, 207 one-bedroom units were leased – up from 173 in March and 124 two-bedroom units were leased as opposed to 97 in March. The increase in activity can be traced to more rental units becoming available as new condos become registered. Bachelor units average $1150 without parking and $1250 with. One-bedroom units ranged from a low of $1300 to a high of $1500 with parking and a den. The range for two-bedroom units was from a low of $1750 to a high of $2100 with parking and a den. Renters were paying a 100% of list price on average for a one-bedroom versus 98% for a two. High demand units were being rented within 2 or 3 days of being listed, while the average was just less than 30 days.