CONDO MARKET REPORT
The Spring Market has arrived - about one month early. As reported by the Toronto Real Estate Board, sales in February were 7300 units - a 77% increase over February of '09. Sales were higher than those in '07 and '08 and were in fact a record. Already March sales are tracking at 9,800 units which will easily surpass those of previous years and will be approaching April numbers. While a lack of snow is certainly a factor, it is apparent that everyone is in a rush to beat the self imposed HST deadline of July 1st!
Our 2010 Forecast called for a strong first half in sales and a slower second half due to three factors - the introduction of the HST (which will NOT impact prices in the resale market but will increase the cost of services and new properties over $400,000). Secondly, we are expecting a bump in Bank of Canada interest rates; and thirdly more listings are coming to market (particularly in the condo segment). Even CMHC is now forecasting the same! Are we flattered?
While sales are increasing, listings are accelerating at an even faster pace. At the end of February, active listings stood at 14,514 units. At the end of January it was just 12,000 and already we are at 17,000 listings and climbing in March! If you track condo listings the same trend is evident. And then there is the Assignment Market which will just add to the supply of condos for sale. The house market usually peaks in June and condos peak a month later. Our best guess for this year is that this market will peak in May or maybe April if the new Fed. Regulations on mortgage lending scheduled for April 19 take a real bite. (See www.bloggingforcondos.com for our take on the mortgage market).
Let's focus on the real world and look at condo sales at One Palace Pier Court on the Etobicoke Waterfront. One Palace Pier Court, an older but well maintained building, sits on a great piece of property with superb views. The first unit we compared sold for $490,000 in 2010. This is a two bedroom with two parking spots and lake views at 1228 sf. The same unit sold previously in 2006 for $420,000 and in 2001 for $312,000. The current price is $400/sf. What scares some buyers is that condo fees are 67 cents/sf which is high for most condos, but all utilities are included. Prices for this unit appreciated at 6% per year over the period which is at the lower end of the condo market. The second unit we looked at was a one bedroom plus one, with parking and lake views. It was fully renovated and sold for $350,000 at the end of 2009.The same unit sold for $288,000 in 2007 (before renovations) and $263,000 in 2004. The current price for this unit is $443/sf. Even with the renovations, appreciation was just 6% per year too.
Condo rentals downtown dropped in February from January - not unexpected as people focus on the May, September, and January months to start their lease. There were 167 one-bedroom units rented from an average low of $1450 without parking to $1650 with den and parking. This was unchanged from last month. For two-bedroom units, the range was again the same as last month $2000 to $2500 for a den and parking. Only 2 three-bedroom units were leased for an average price of $3500. Condos are still leasing for 100% of list price. One-bedroom units are leasing up in just under 20 days while two-bedrooms take longer to lease at 30 days approx.
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