CONDO MARKET REPORT
January started out with a rush - sales up 13% over January a year ago, and a record for the month according to the Toronto Real Estate Board. You can credit that to the mild weather and not to any change in the market. Early sale numbers for February are running at the same pace as a year ago and yes the weather is colder. There is no reason to change our 2007 forecast that sales would match last year's numbers (which incidentally is more optimistic that most forecasters - but then again they have consistently underestimated the market for the last eight years). Sales for the condo market were up 10% for January, but just 8% in the Downtown condo market. This is not a surprise as condos are impacted less by changes in the weather.
Market analysis shows that 'new' and 'active' listings Downtown are virtually unchanged from a year ago. With more buyers already in the market place for '07, prices will certainly be on the rise - expect 5+%. The Etobicoke Waterfront has under performed the market over the last few years but we are starting to see improvement in sales activity with a slight increase in prices. There is an increase in demand for larger units and the price differential to Downtown is attracting some buyers. Still, a sale-to-list ratio in the 22% range is not indicative of a sellers market - one needs at least 35%!
This month we focused on sales at The Richmond - 323 Richmond St. East at Sherbourne. A lot of people thought the building was too far east when it opened, but prices have increased consistently. Back in 1998 you could buy a two bedroom with parking for $178,000 from builder plans! This unit also included a den and is about 885 sq.ft. It resold first in 2001 for $235,000 and again in 2005 for $289,000. An identical unit sold for $301,500 at the end of 2006. Current prices are $340 per sq.ft. The unit appreciated by 69% over 8 years or just under 9% per year. However the biggest increase occurred with the first buyer. From the time the unit has been in the resale market in 2001, it has increased in value by only 5% per year. The same results can be found in tracking a one bedroom plus den and parking. This unit sold last year for $235,000. The very same unit sold a year earlier for $216,000. This represents an annual increase of 8.8%. At 635 sq.ft., the unit sold for $370 per sq.ft.
Compare these numbers with average prices that most economists use. The 'average sold price' of a downtown condo in January of 2007 was $301,000 and in January of 2006, the 'average price' was $312,000! Are prices really falling?? Just ask any buyer! The answer is that the mix of sales changes from year to year and this distorts the averages and makes the number of minimal value.
In January, 155 one-bedroom units were leased Downtown. Forty-five units were leased with no parking and went for a median price of $1350 versus $1500 with parking. There were forty-two, two-bedroom units leased with a median price of just over $2,000 per month. There were no three-bedroom units leased in January! What have we been saying about a lack of big units in this market! For those thinking of renting, the vacancy rate for apartment units, as reported by CMHC is just over 3% and represents a balanced market. Condo rentals have a vacancy rate of less than 1%! So don't expect owners to accept offers that are not at list or close to list price.
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