Condo Market ReportSALES COMMENTARY: The public media has now concluded that the Toronto Real Estate Market and the downtown condo market in particular are in full market correction. What does that mean? Certainly sales are slowing. In September, the Market was down 21% from September a year ago. All condo sales were off by 29% and downtown the number was 31%. The pundits say that prices are soon to follow in lock step. Currently there is no sign that prices are retreating. So why would prices retreat? Unlike other commodities, most sellers do not keep reducing the price until their property sells. They simply take it off the market. That is why the sale to list ratio is never 100%. The only time real estate prices fall is when people are forced to sell due to job losses or rapidly increasing mortgage rates. While the economy is slow, jobs are still being created in Toronto. And interest rates are not moving upwards for at least the next two years. The end result is that mortgage arrears for homeowners have been unchanged over the last few years (at .7%) and are unlikely to increase. While the downtown condo market has been the weakest segment of the market since May there are some positive signs. Mid October sales are off by 18% from the same period a year ago versus 30% in the previous two months. Secondly downtown condo rentals are 33% higher this September than September of last year. (Yes TREB put out a rental report for Q3 that showed condo rentals over the whole GTA were up by just 3%. But that is not our market.) When you total sales and rentals for September of 2012 versus sales and rentals for September of 2011, total units are down by just 4%. The fact is people still want to live downtown. The move back to sales will probably take place in time for the spring market. Those buyers trying to get ahead of the market should focus on November to January time lines. For this Report we looked at sales at the Luna Vista at 25 Capreol Court. This is a two year old building in the City Place complex just west of Spadina. We would describe the building as being in the mid-price range. The first sale we looked at was a two bedroom, two bath unit with parking, locker, and balcony on a high floor. It is 745sf and sold for $410,000 in September. That works out to $550/sf. An identical unit but without locker also sold in September at $380,000 or $510/sf. It was on a lower floor and the price difference is about $1,000 per floor. The high floor unit previously sold in 2010 for $377,000 or an appreciation of 9% over 22 months. The lower floor unit sold in 2011 for $359,000 for a rate of appreciation of 6% over 15months. We also looked at a one bedroom with balcony and locker but no parking on a high floor. It sold for $330,000 or $528/sf. It sold 12 months previously for $325,000 or just a gain of 1.5%.  The concern about appreciating condo prices in the resale market has been greatly exaggerated by the media as these statistics demonstrate. Our Market Reports continue to show a levelling off of resale condo prices which began late 2011. RENTAL COMMENTARY: People continue to want to live in downtown Toronto. That trend to downtown is evident in major cities throughout the world – even in cities like Detroit! The end result is that when people decide to rent rather than buy; resale prices level off and rental prices start to climb. Studio condos edged up to $1425 per month on average. Just under 300 one bedroom units were leased in September. The basic one bedroom without parking was listed for $1650 on average but leased for $1700! Adding a den and parking to a one bedroom will bring the average rental price to $1900. The one plus one with parking is now the most popular rental unit. Two bedroom units without parking start at $2300. A two bedroom plus a den and parking now rent for $2700 on average.

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