Condo Market Report July-August 2019

17 July 2019
Remax-Condos-Plus

Toronto Condo Real Estate Market Report July-August

SALES COMMENTARY

GTA Year-Over-Year Summary for July 2019

June sales on TREB were 8860 units. Even though they were 10% higher than June of last year, we now know how this year will unfold. May will be the peak sales month this year, and we will finish the year with 84,000 sales – 8% higher than 2018 and slightly less than 2010!

The positives from this market are: 1) listings are running below that of 2018; 2) because of lower listings, prices are increasing in the 3-5% range; 3) this type of market allows people to make plans going forward; and 4) we have a strong base for the 2020 real estate market.

Looking at the condo market, June sales were 3% lower than June of last year and on a year-to-date basis, they are 1% down. Why is the condo market underperforming the overall market and particularly the detached market? As condo prices have increased faster than any other market segment, the low-rise market has become more attractive for many. Further, a large part of the condo market is owned by investors and they have preferred to rent out rather than to sell their units. See our Rental Commentary for the growth in numbers.

In looking at the Humber Bay condo market, sales in June were up by 8% over last year, but listings were lower. For downtown condos, sales were actually 14% lower than for June of 2018. While for the same period ‘new’ and ‘active’ listings were unchanged from a year ago. The interesting point was that ‘new’ listings for June were actually lower in number than ‘active’ listings at month end, meaning supply is shrinking not growing!

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TORONTO MLS SALES

TORONTO MLS SALES

This chart plots monthly MLS® sales for the current year and previous three years. The recurring seasonal trend can be examined along with comparisons to previous years for each month.
Source: Toronto Real Estate Board

FESTIVAL TOWER:    80 JOHN STREET

This month we looked at sales in the Festival Tower, the home to the Toronto Film Festival (TIFF) and Bell Lighthouse. The building is eight years old and is a ‘walk to anywhere’ location with superb amenities.

The first unit we examined was a one bedroom + den with balcony and locker, but no parking. It faces north on a high floor. It sold in 2013 for $425,000 and then in 2019 for $649,000. Over the six years, this unit increased at 7% per year. At just over 600sf the current price is $1050/sf.

For the first time, we looked at a more luxurious unit. It is two bedrooms plus den with two baths. It has parking, locker, plus a large balcony. It also is on a high floor facing southeast. This unit sold in 2011 for $945,000 and then in 2017 for $1,450,000. That represents an annual increase of 7% over the period. This same unit sold again in 2019 for $1,650,000 with an annual increase of 7% again over two years. The point is that appreciation in this building has been consistently at 7% since registration. At 1250sf the price for this unit is now over $1300/sf. This is one of the few buildings where the price psf is greater for larger units. Currently, there are five units for sale out of 378 units in the building.

RENTAL COMMENTARY

For the first six months of 2019, there were 16,395 condo apartments rented, an increase of 12% from 2018. At the same time there were 11,758 condo apartment sales, a decrease of 1% from 2018. That’s all you need to know about the impact of the Stress Test on the real estate market. It seems that the goal of this country is not to assist home ownership but to foster a nation of renters!

Turning to the downtown condo rental market, the vacancy rate remained below 1%. Studio rents remained unchanged from last month at $1875 on average. The one-bedroom market, without parking moved slightly higher to almost $2200 per month. The one-bedroom plus den averaged $2400 without parking and $2550 with parking.

For the two-bedroom market, rents were unchanged at $2850 without parking and $3150 with parking. The two-bedroom plus den and parking has now approached $3600 per month. The three- bedroom market was also unchanged at $4400 per month.

While we have seen numerous list price reductions in the rental market, the final lease-to-list price ratio remains at 100%. Obviously, landlords are attempting to get the maximum rent at the outset because of their concerns over rent controls for tenants staying on from their first year. Potential tenants need to ensure that they are dealing with agents who know rental prices and can identify the good deals.

We are about to enter the peak rental period which runs from mid-July to mid-September. During this period, tenants need to get their documents in order before they submit an offer.

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Percentage of GTA Condo Apartments Used as Rentals

This graph plots the percentage share of the Greater Toronto Area Condo Apartments used as Rentals for the second quarter of 2019.

Source: CMHC, Rental Market Report

Share of GTA Apartments in Rental

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