JULY/AUGUST 2013 - TORONTO REAL ESTATE MARKET FORECAST
June sale results can be interpreted in a variety of ways. For those looking for any good news, sales matched those of June 2012 and the number of new listings for the month declined from the same month last year. For those expecting June sales to match those of May (count us among that group), sales actually declined by 9.7%; making May the top sales month for this year, for the second straight year. Small consolation, the May to June decline in 2012 was 13.4%. In 2011, June was actually the biggest sales month and 2011 was the second biggest sales year on record for the Toronto Real Estate Board. If the all-time record was in 2007- six years ago, how much lower can sales really go?
In the condo market, sales were 3.5% lower this June as compared to June of 2012. Encouragingly, both new listings for the month and total active listings were lower for June as compared to June of 2012. Turning to the downtown condo market, sales were off by only 2% for June. Active listings are now equal to June of 2012 as new listings for the month of June in 2013 were down 13% from new listings last year for June. The Etobicoke Waterfront continues to show weakness. Sales for June were 14% lower than June of last year. Days on Market for sold condos downtown was just 28 days compared to 47 days in Etobicoke.
For the first two weeks of July, sales were up by 2.2% over the first two weeks of June last year. We are expecting sales to be 5% higher than July of last year by month end. Condos in the 416 area continue to outperform those in 905. Condo sales in 416 were ahead by 3.7% over last year and average prices continue to edge up. Buyers sitting on the sidelines hoping for prices to soften should be more concerned that rising mortgage rates will make condo ownership more expensive and they should be locking into a 90 rate guaranty with their preferred lender. Sellers of many condos should also not be feeling too smug. Many owners at Maple Leaf Square and other buildings will be losing their views in the next few years and they should look at selling now to lock in their price gains.
This month, we looked at sales at 96 St. Patrick (9to6) a condo located on a small street one block west of University and within walking distance for people who work at the hospitals, U of T, and the downtown financial core. Built in 2008, it has 220 units. The first unit we looked at was a one bedroom with parking, locker, and balcony at 618 sf. It sold in February of this year for $381,000 or $610/sf. The same unit sold for $348,000 in 2010 – an appreciation of just under 3% per year. We also looked at a townhouse sale in late 2012. This two bedroom plus den unit has a ground floor patio and balcony along with parking and locker. It sold for $570,000. At 1367 sf, that is only $420 per sf. Rarely do you see townhouses downtown. The price is also cheaper on a per sf basis than freehold units in areas such as Leslieville and Little Italy. This townhouse previously sold over three years ago for $475,000 resulting in a 5% annual compounded rate of appreciation. In case you think all large units, sell at this discounted price per sf, a two bedroom unit measuring 840 sf sold for just over $600 per sf in 96 St. Patrick.
Currently there are five units for sale in the building (2% of the units). Current list prices are up to $650 per sf. Given its location, this is a much in demand building and prices here are at the top of the resale market.
We are reaching the peak of the market for rentals as people search for August and September occupancy. In just about every category, the list or ask price to the sold or rented price is 100%. Not much room for negotiation! Over 40 studios were leased for an average price of $1400. Almost 600 one bedroom units were leased downtown in June. The one bedroom without parking averaged out at $1550 – up $25 from last month. Adding a parking spot brings you to $1750. A one bedroom plus den without parking was slightly cheaper and the one plus one with parking remained at $1825. Just under 300 two bedroom units were leased and rents eased off slightly from last month starting at $2100 per month without parking to $2800 for the larger units with parking. Only eight three bedroom units were leased at an average of $3500 per month. With a vacancy rate just below 1% downtown, rising rental prices are providing additional support to current condo prices.