While the Spring weather has been somewhat unpredictable, Toronto’s real estate market has maintained a hot sizzle!
Record breaking sales continued throughout April with a 7% jump compared to April 2015. Condo sales were ahead by 17% while detached and semi-detached sales in Toronto actually declined by 4% and 11% respectively.
My colleagues and I are seeing multiple offers on condos (both for sale and lease), a phenomenon that up until fairly recently was the exclusive domain of houses for sale.
It’s no secret that governments have been pointing the finger at foreign buyers as being the source of unprecedented price increases. Absent from the dialogue however, is the stark lack of listings available which we see as playing a pivotal role.
Let’s delve a little deeper. ‘New’ listings for April were 10% lower than April of 2015 and ‘active’ listings in total are 27% lower than the same period last year.
We also have to factor in Toronto’s double Land Transfer Tax has which has discouraged a lot of homeowners from listing. Faced with the prospect of paying an extra $50,000+ on the purchase side of the transaction, many are opting to simply stay put.
Even more interesting from a supply standpoint, is that a significant chunk of homeowners that do list their properties for sale are in fact transitioning to retirement homes or whose adult children are selling their estates.
Turning to the condo market, we want to comment on the failure of Urbancorp, a major Toronto condo developer who declared bankruptcy recently. Many in the media have suggested that this single event is the start of some sort of condo correction. The reality is perhaps the opposite extreme.
Urbancorp, had a poor reputation in the real estate community. Their demise will mean even less available condos to choose from, tightening the market even further. The lesson to be learned?
It’s in a buyer’s best interest to hire an experienced agent who knows all the builders and can advise on the pros and cons of a given project. The sales person working at developer’s sales centre is employed by the builder and does not have a fiduciary relationship or obligation to the lone-buyer.
Looking specifically at our own markets, condo sales downtown was up by 23% over April of last year. At the same time, ‘active’ listings were lower by 9%. We are now at around two month’s supply of listings which is the lowest on record. Even the Humber Bay Shores market, which has been one of the weaker performers, recorded a sales increase of 8% compared to April of last year.
Again, ‘active’ listings in this market actually dropped by 40%. This has created an inventory gap with less than two month’s supply of listings available. Our guess is that prices will start rising more in line with the downtown condo market, going forward.
The Voyageur: 2121 Lake Shore Blvd West
As the outdoor weather approaches we looked at sales on the Humber Bay Shores market and 2121 Lake Shore in particular.
The Voyageur is a Monarch built condo completed in 2004. With walking access to the waterfront, parks, and trails; it supports an active lifestyle. The second advantage is that units, on average tend to be larger than those in the downtown market.
The first unit we analyzed was a one bedroom plus den with two baths, locker, balcony, and parking. It sold in 2006 for $245,000 and nine years later for $361,000.
This represents an annual increase of 4.5%. The unit is 848 sf which translates into $425/sf. We then looked at a larger two-bedroom, two baths with a den. It included a locker, two balconies and two parking spaces.
The unit first sold in 2008 for $370,000 and again in May of this year for $510,000; a 4.1% annual increase. This well designed unit is 1010 square feet which converts to $505/sf. If you eliminate the second parking spot, the price drops to $480/sf.
Currently there are only two units for sale in a building of 313. The first is listed at over $500/sf and the second, just slightly under.
(on the Downtown Market):
The rental market is on fire! Before viewing properties with a potential tenant, we advise them to complete a rental application, and have their employment letter and credit report in hand. And oh yes, also their cheque book. Multiple offers on rentals are now common and the peak market is just starting this month. The most common period for ‘days on market’ is 4 in the one-bedroom market and 5 in the two-bedroom segment.
The studio market still sits at $1425/month. The one-bedroom market with over 900 units leased in April is up 29% over March. The starting rent for a one bedroom without parking was $1660 in April. The one plus den with parking market is at $2,000 per month. Still over 60% of the one-bedroom market does not include parking.
The two-bedroom market, without parking starts at $2200/month. Two bedrooms with a den and parking units are now over $3,000 per month – the average is $3100. Twenty per cent of this market is now rented out without parking.
The three-bedroom market continues to grow and rents are continuing to average $3500/month. In April, this upper segment saw an average of 3 days before a given unit was snapped up.