SALES COMMENTARY:

May sales were a record for the month – 2% higher than last year, and the second best month overall, as reported by the Toronto Real Estate Board. On a year-to-date basis, sales are 4% ahead of last year’s record pace. Condo apartment sales for May were also higher by 3.8% over May of last year. The Downtown condo market was even stronger with sales up 13.7% over May of last year. On the other hand, condo sales on the Etobicoke matched last year’s numbers. Generally speaking, the central core is out performing the suburbs in terms of sales and price increases. And in some markets there are signs of a slower market.

What is amazing about the Downtown condo market is that while sales have increased, so too has the sales-to-listing ratio – from 39% last May to 47% this May. There is still a shortage of prime condo listings for sale and many buyers have turned to the new as opposed to the resale market. This explains the continued strong sales of new condo developments. Will there eventually be a slow down to this market? YES. Will there be a market correction? NO. Job and employment income growth can certainly support today’s prices. But what the experts have significantly underestimated is the desire of young people to live downtown and to experience the condo lifestyle. In fact, Toronto prices are not that much higher than the rest of Canada. If you look at major cities in other countries, the real estate price difference to smaller towns is considerably larger.

With summer, we decided to look at prices for ‘cottages in the city’. In this issue we looked at prices at the Waterclub – a new condo that is extremely popular with young people. The units tend to be small but the amenities make up for it. The first unit we examined was a one bedroom plus solarium with no parking at just under 700 sq.ft. It sold in March of this year for $252,000. It was listed for $249,900 and sold in 7 days! The very same unit sold in March of 2005 for $230,000 – a price increase of 9.5%! The price was $370 per sq.ft without parking! The second unit we tracked was a two-bedroom/two bath unit with parking. This unit first sold in October of ’05 for $367,000. The identical unit, three floors lower, sold for $405,00 in April. This is a price increase of 10% in just six months! The unit is just under a 1,000 sq.ft. and when you adjust for parking, the price per sq.ft. is now $390. Remember what we said at the start of the year, bigger units are going to sell for more per sq.ft. – it is just a matter of time!


RENTAL COMMENTARY:

The Rental Report for the first four months of ’06 has just been released by TREB. One-bedroom rentals in the Downtown core are 52% higher than for the same period of ’05. At the same time, two bedroom units increased by only 4%. These results confirm that investors in new developments are buying the one-bedroom units to lease out. With these new figures, Downtown leasing of condos now accounts for 49% of the total condo leasing market in the GTA.
For rental prices, the average one bedroom leased for $1511 during the last four months – up 2.6% from the first four months of ’05. For two bedrooms, the average price declined by 5.8% to $2181. While this appears to be a contradiction, what is happening in the market is that the size of new two bedroom units has been shrinking from 1,000 sq.ft. to the 800sq.ft. range and investors have been converting dens to bedrooms, even though it may not be legal in some instances!