March/April Market Report
February sales results from the Toronto Real Estate Board were almost identical to January. And for the first two weeks of March, results are eerily similar. It seems like we are just treading water because of the harsh weather. Overall sales in February were up by 2% over February of 2013. New listings were off by 1% from February of last year and active listings are now 12% lower than this time a year ago. For the first two weeks of March, sales are unchanged from the same time period last year and new listings are off by 10%. Bad weather and a lack of listings (not a lack of buyer interest) have certainly hampered the market.
Surprisingly, the condo market is outperforming the overall market. In February sales were 10% higher than a year ago. For downtown condos, the sales increase was even greater – up by 40% from last year. While poor weather makes viewing condos easier, there are more listings than last year and there is a decided change in people’s attitude to buying rather than renting. In January there were 2.3 times more rentals than sales. In February, the number had dropped to just 1.4 times more rentals. While active listings are 9% higher than a year ago, the sale-to-list ratio has also increased from 23 to 30% from this time last year, showing a tighter market. We expect this number to climb to over 40% in the spring market.
The Etobicoke condo market recorded no change in February sales from the same month last year. At the same time, active listings in this market declined by 19%. This is a positive sign for a market that has been one of the slower markets in Toronto.
This month we looked at sales on Bay Street (the number one street for condo sales in Toronto), and in particular, the Liberties which consists of three buildings. The Liberties is an older but well maintained complex in a prime location with a walk and transit score of 100! We zeroed in on sales at 711 Bay. The first unit is your entry level one bedroom with no parking and no locker. This 570 sf unit sold first in 2008 for $220,000 and five years later in 2013 for $286,000 or an increase of 5% per year compounded. The price is 500 per sf. The second unit we looked at was a two bedroom plus den with parking and locker. This unit sold three times, starting in 2004 for $292,000. It sold again in 2008 for $380,000 and then in 2013 for $440,000. Up to 2008, the rate of appreciation was just under 7% on an annual basis. From 2008 to 2013, the annual rate of appreciation slowed to just 3%. This unit is just under 1100 sf which translates into a price of just $420/sf. Currently, there is only one unit for sale in the building. It is the identical unit offered at $439,900 – unchanged from the last sale. Prices for new condos on Bay are closer to $600/sf. So why is this building so much cheaper? First this is an older building with 8 ft (as opposed to 9+ ft) ceilings which seems to be a must for first time buyers. Secondly, condo fees may appear high at 70 cents/sf but all utilities are included. This is different from newer condos where most utilities are individually metered and condo fees appear to be lower.
The gap between sales and rental activity appears to be shrinking. In February there were just under 600 condo units rented in the downtown condo market on TREB. The average rent of a studio condo remained unchanged at $1400 per month. In the one bedroom market, more one bedroom units without parking were rented than units with parking for the third straight month. The most in demand unit was a one bedroom without parking which rented for $1600 on average. The next most popular unit was a one plus den with parking which rented for $1900 – up from the start of the year. There were 170 two bedroom units leased in February. Two bedroom units without parking now start at $2100. Most two bedroom units have parking and when you include a den, the average price is now over $2800 per month. In terms of the rental market, there seems to be adequate supply of one bedroom units and rents are steady. In the two bedroom market, there is less rental supply and rents are rising at about 5% on an annual basis. Only six three bedroom units were leased in the month at an average rent of $3500.