CONDO MARKET REPORT
The Toronto Real Estate Board reported that residential sales in April were 5% lower than April a year ago but were ?the third best April on record?! So what does that mean? Absolutely nothing! While monthly statistics are useful to economists and accountants, they represent an artificial cut-off when measuring market statistics. The real question is whether this market has ?legs? or this a turning point? First let?s look at the year-to-date figures. Sales are still 4% higher than last year?s record numbers. Early indications for May suggest that we will at least match last year?s May sales. And remember that the two biggest sales months last year were May and June. While active listings are 4% higher than a year ago, the sale-to-active listing ratio for April was 33%. This suggests a balanced market with a slight advantage to sellers. Although people trying to buy in hot areas facing multiple offers may want to differ.
In the condo apartment market, sales in April of ?06 matched those of ?05. Downtown, condo apartment sales were 2% lower than same month a year ago while sales were off 14% on the Etobicoke Waterfront. Compare these numbers to the year-to-date ones and we find that Downtown condo sales are 20% than for the same period of ?05! When you examine the trends ? people want to live Downtown, condos are the most affordable option, and peoples? lifestyles have changed.
The new CMHC Condominium Survey confirms that the condo market will continue to be healthy even with all this new construction. While new condo completions in 2005 were the second largest annual number, the number of unoccupied units (i.e. unsold) was only about 2,000 units. Compare that to the 1990/91 period (that experts keep recalling) and the unsold units were 8,500 (in a much smaller market). Also at that time owner-occupied units were 65%. Today owner-occupied units are over 80%! Investors now are a much smaller portion of the market. This reduces volatility going forward.
Renters, and some experts, seem to think that the apartment rental and condo rental markets are one and the same. While the vacancy rate for apartment rentals is 3.4%, the vacancy rate for condo rentals at the end of 2005 was just .9%. In 2004, the vacancy rate was .8%. In other words, the market absorbed all of the new condo completions in 2005 that investors had purchased to rent out. It seems obvious. Renters tend to be younger people and they want ?new? i.e. condos with amenities and not ?old? apartments units to live in. In April, 155 one-bedroom condo units were rented through TREB. The median rent was $1500 with parking and $1350 without parking. Studios averaged $1100. Two-bedroom units leased out at $2,000 on average and at 100% of list price!
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