February 21, 2013
By Jamie the Condo-Oracle Johnston
January results are out from the Toronto Real Estate Board and we have yet to witness a ‘Crash and Burn’ as MacLean’s Magazine and others have predicted. Sales were only 1.3% lower than January of 2012.
Yes, new listings were up and overall condo sales were down in January over the same time last year by 5.1%. But overall sales for the month were higher than in December which was a reversal of what we saw in 2012 where December sales were actually higher than January of that year.
Looking at the downtown condo market – the supposed “epicentre: of the coming Canadian market crash (as per the doomers), condo sales were down by 7.8% compared to January of 2012.
That compares more favorably than the 20 to 30% monthly declines on a year over year basis experienced in the fall market. Listings were also up by 11.2%. While naysayers will jump on a sales-to-listing ratio of 19% this January – it was only 22% a year ago.
Condo sales on the Etobicoke Waterfront in January matched those of a year ago, the number of active listings doubled as registration took place for both the Nautilus and Beyond the Sea condo projects.
While the first two weeks of February produced disappointing results, sales were off by 14.4% from the same two weeks of 2012, we can chalk most of that up to a difference in the winter weather. House hunting and buying is an activity that often gets postponed for a week or two. So let’s wait for March and the spring market before we pass judgment on the condo market.
What we can tell you is that there are plenty of buyers in the market right now. The problem or challenge is that these buyers expect a price discount from the sale prices of last summer. On the other hand, sellers still expect to get the same prices as last year and are not accepting anything less. Who will be the first to blink?
This month we examined sales at 18 Yorkville (at Yonge), a condo building in the priciest area of downtown Toronto. The first unit we tracked was a one bedroom with parking and locker at just 546 sf. With hardwood floors and 9 and 10 ft. ceilings, it has curb appeal. It sold in April of last year at $437,000 in just 21 days. The price just over $800 per square foot (sf).
The same unit sold first in 2005 as new at $277,000 and then again for $410,000 in 2010. Hence most of the price appreciation happened before the Financial Crisis of 2008/2009. In the last two years the unit has only appreciated by just over 3% per year.
The second unit we looked at was a two bedroom, two bath unit with a locker and two parking spots. It also sold in 2012 for $685,000. The unit is 803 sf and when you eliminate the second parking spot, the price was $750/sf.
The very same unit sold in 2009 for $588,000 for a price gain of 5% per year. So are prices dropping in this building for 2013? Currently there are only two units for a sale. A one bedroom is listed for $449,000 without parking, or $750/sf. A small two bedroom is listed at $615,000 with a single parking spot, or $800/sf. If you expect sales to take place at 3% below list price, then prices in this building have softened slightly but are still over $700/sf—let that number absorb for a moment.