Toronto Condo Market Report November-December 2019

19 November 2019
Remax-Condos-Plus

Toronto Condo Real Estate Market Report November-December

SALES COMMENTARY

GTA Year-Over-Year Summary for September 2019

October sale numbers from TREB provides two continuing trends. With 8491 sales (up 14% from October of 2018), this is the best October (with the exception of 2016) for the last six years. Yes, the resale market is back to normal levels. But, the second trend shows that listings both ‘new’ and ‘active’ are down 10% and 19% from a year ago. That can only mean higher real estate prices going forward. For both buyers and sellers, the question becomes: how much? Without any Government intervention in the market, our guess is 6% on average. However, this will vary by region and by property type.

Looking more specifically at the condo market, October sales were only 4% higher than a year ago. But, when you look at condo sales over one million dollars, the October increase over October of last year was 32%! And 86% of these sales were in the City of Toronto proper. This increase can be traced to ‘baby boomers’ downsizing and wanting larger condos, and to non-resident investors who find the Toronto real market an attractive place for a second home. Political issues in the U.K., Europe, and the U.S. have made Canada and in particular Toronto a top destination. The good news is that the non-resident Foreign Buyer’s tax of 15% of the purchase price has resulted in average prices in this segment increasing by just 1% over October of last year – well below other markets.

Turning to the Downtown condo market, October sales were 6% higher than a year ago. In Humber Bay Shores, sales were unchanged from October a year ago. On the listing side, both ‘new’ listing for the month and ‘active’ listings at month’s end were unchanged from a year ago. The takeaway is that ‘active’ listings are lower than ‘new’, meaning that the inventory of condos for sales continues to decrease which suggests that prices will be higher, not lower, in the short term.

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CONDO SALES OVER ONE MILLION IN OCTOBER

Condo Sales over One Million

There were 167 condo sales that sold for over one million dollars in the month of October.
Source: Toronto Real Estate Board

MAPLE LEAF SQUARE:   
65 BREMNER BLVD

With the start of the hockey and basketball seasons, we thought we would look at sales of the condo attached to Scotiabank Arena. There are actually two towers of 49 storeys each. If you want to be on the PATH, experience entertainment and dining, then this is your location. You don’t need a car here. Our sales focus is on 65 Bremner.

The first unit we examined was a one-bedroom without parking or locker. It has a small balcony on a mid- high floor. It sold in 2016 for $333,000 and again in 2019 for $563,000. That translates into an annual increase of 19%! At 484 sf, the final price is $1163 psf. Almost what pre-construction is selling for today.

The second unit we looked at is a two-bedroom, two-bath with parking, locker and two balconies. With 9 ft ceilings on a high floor, it sold in 2014 for $738,000. The same unit sold again in 2019 for $1,175,000. Over four and a half years, the appreciation is 12% per year. At 1260 sf, that works out to a price of just $930 psf. A steal in this market as it includes parking. and views! What you need to know about this building is that it is heavily rental with younger tenants.

RENTAL COMMENTARY

We are now entering the slowest season for the rental market. At this time of year, rents are usually the weakest and there are more price/rent reductions.

Studio prices are off by $25 per month to an average of $1925 from the previous month. The starting point for the one-bedroom is also lower by almost $100 to $2200 per month. The two-bedroom market was also lower by $100 per month.

The take-away is that there is a correlation between average incomes and rental prices. While rents have risen by over 10% in the past year, there is an upward limit, as average incomes are rising by less than 3%. Landlords prefer to rent to employees with verifiable incomes as opposed to self-employed individuals with income that is hard to confirm.

Note that we do not believe that there is a strong correlation between average incomes and real estate prices for a number of reasons. First, there are a number of non-resident buyers in Toronto. Secondly, a ‘wealth transfer’ between generations is under way. Finally, self-employed individuals are more prevalent as buyers than renters.

With that being said, the number of rentals in the downtown condo market was over 70% larger than the number of sales in October.

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AVERAGE RENT OF A TORONTO ONE BEDROOM APARTMENT

This Map shows the average price of a one bedroom apartment for the third quarter in Toronto by neighbourhood.

Source: Toronto Real Estate Market


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