CONDO MARKET REPORT
The Toronto Real Estate Board no longer publishes mid-month sales numbers hence we are forced to guess the market going forward, based only on January results. In January, overall sales were ahead by 12% over January of 2016, but active listings were 49% lower than the 2016 number. We are starting to see all listings sell at over the list price. Some by as much as $200,000, which is scary!
In terms of the downtown condo market, January sales were up 23% over the same month last year but ‘active listings’ were down by 57% from last year. The result is the same as the overall market, multiple offers and most sale prices above the list price.
This is the first time we have been concerned over the state of the market. This imbalance has caused prices to spike by over 20% in the last twelve months. But the real question is whether this market can correct itself? With currently only 5,000 ‘active listings’, how will we generate 11,000 to 12,000 monthly sales in the peak spring market? We would have to generate about 15,000 new listings per month just to get there and we don’t see that happening.
Besides a lack of listing product, we believe that many buyers will not qualify for mortgages at these higher prices. The Feds new lending rules have not impacted as yet – but they will, and lenders are becoming much tighter on applicants and appraised prices. That’s why we are still seeing lower sales this year and prices scaling back to more normal price increases of 10%, year over year.
So, if you are thinking of selling in 2017, do it now and don’t wait for the late spring or summer market! You will not get higher prices later in the year. And for buyers who have the money, don’t give up. The market and prices will come back to you in the latter half of the year!
Global Comparison of Condo Prices for Downtown Living - Price of a 970 sq ft Condo as a multiple of Income
SPIRE CONDOMINIUMS: 33 Lombard Street
This month, we are looking at the Spire Condominiums - att 33 Lombard Street. The building, registered in 2007, is in the St. Lawrence Market area, with just a short walk to the Financial District at King and Bay. We looked at a one bedroom unit with 9 ft. ceilings, locker, balcony, but no parking. It sold prior to registration for $159,000; in 2009 for $242,000 and in late 2016 for $362,000. At 508 sf, that works out to $710 psf. Today the price would be $800 psf. The annual appreciation rate is 7.7% over 11 plus years. The second condo we tracked was a two bedroom, two bath, corner unit. It has parking, a locker, and two balconies and faces southwest on a high floor. It sold in 2009 for $582,000; in 2013 for $657,000; and in late 2016 for $820,000. At 960 sf, the price is $850 psf. The annual increase was 5.5 % which is lower than the one bedroom unit, simply because that one was first purchased prior to registration. This 45 storey building has 353 units but only one unit is currently for sale.
New condo projects offered in 2017 are selling from $800 psf upwards, depending on the site location. It looks like developers believe that prices are not going down.
A lack of listings is also hampering the leasing market. We had just over 800 units leased in January downtown, which is about two times the size of the condo sales market. Rents are usually lowest at this time of year, but we have seen no drop off. Studios go for over $1500 per month; one bedroom units without parking start at $1775 on average. The most popular one bedroom, includes a den and parking, and will lease for over $2100 per month.
The two-bedroom market is even tighter than the one bedroom. This market starts at $2800 and goes well over $3,000 per month. The three-bedroom market is at $4,000 per month, although units are hard to find.
The key point in all rental markets is that the most common ‘days on market to lease’ is somewhere between two and ten days. For tenants, that means taking your cheque book with you when you go to see properties. A second visit is not an option for popular rental units.