Toronto Condo Market Report February-March 2020

25 February 2020
Remax-Condos-Plus

Toronto Condo Real Estate Market Report February-March 2020

SALES COMMENTARY

Toronto Real Estate Year-Over-Year Summary

Sales results from January confirm that this will be a strong real estate year – not just in sales but for prices too. In January, sales were up by 15% over January of last year. But to put this in perspective, they matched January sales from 2016!

In terms of prices, the increases are even more dramatic. We had forecast a range of price increases for 2020 (see table). We are already averaging increases of 10% and more across all property types except the over $2,000,000 market. That is because of a severe shortage of new listings – down 17% from January of 2019 while sales increased!

In terms of the overall condo market, sales were 8% higher than a year ago in January while condo prices were almost 15% higher! In the downtown condo market, sales were up by 23% while new listings were down by 9%. In the Humber Bay Shores market, sales were surprisingly lower by 10%, but that is because new listings were down by 29%. In January of 2020, the biggest price range for condo sales was $500,000 - $600,000. A year ago, it was $400,000 - $500,000. For downtown condos, the entry point is now $500,000. See out graph below which shows a shift in condo sales over the past year of almost a $100,000 higher.

For buyers, we expect to see a lot more listings in the latter half of March and April which should reduce the number of multiple offer sales and hopefully slow the price increases we have experienced in the first two months of 2020.

Search Properties for Sale2020 Price Increase Forecast

Price Range of Condo Sales
2019 VS 2020

Price Range of Condo Sales 2019 vs 2020

This Graph plots the number of condo sales categorized by price range. We can see that there is a shift in condo sales over the past year of almost $100,000 higher.
Source: Toronto Real Estate Board

Vu Condos Comparison

VU CONDOS:   
116 GEORGE STREET

The Vu Condos consists of two towers – 112 is a modern 24 storey tower and 116 is a soft loft mid-rise tower with 10 ft. ceilings. Located in the St. Lawrence Market area, it is extremely walkable to work and shopping.

Our focus is on 116, and the first unit we compared was a one bedroom and den with parking and locker. Its main feature is a 200 sf. private terrace which adds considerable value. The first sale was in 2017 for $714,000. It sold again at the end of 2019 for $775,000 (in just 4 days at 11% over ask). At just under 750 sqft., the price is $1060/sqft. and an annual increase of less than 5%.

The second unit we tracked was a two bedroom/two bath with a den. It has parking, locker and a Juliette balcony. The original sale was in 2010 (the year the building was registered) for $410,000. Ten years later, in January of this year, it sold again at $795,000. The annual increase was just under 7%. At just under 900 sqft, the price is $890/sqft. A rough estimate places a value of $100,000 for the terrace on the smaller unit. There are 171 units in the building and there is currently nothing for sale. This is a first and is proof of the severe shortage of listings.

RENTAL COMMENTARY

The number of leases downtown in January at just under 1,000 units was slightly higher than in January of 2019. Still the rental market was three times the size of the sales market for the month. Properties for lease are sitting on the market for over 20 days on average, as opposed to less than 10 last year. The rental market is softer as tenants are resisting the continuing increase in rents. Most tenants are salaried employees whose increases are in the 3% range. We did experience a one-time jump in rents of almost 10% but we expect rental increases to slow to about 3%.

The one area where rents continue to rise is in the studio market. Last January, they averaged $1800 per month and this year we are at $1900.

The entry point for the one-bedroom market without parking was just under $2200 per month as compared to almost $2300 last January.

The entry point for the two-bedroom market, again without parking was $2800 – again slightly lower than last year. However, the larger two-bedroom market with a den and parking is now approaching $3500.

The three-bedroom market remains small and it ranges from a low of $3700 to a high of $10,000 plus.

The rental market is characterized by price/rent reductions as many landlords are trying to extract the maximum rent from vacant condos. City imposed controls on Airbnb have also forced more landlords into the long-term rental market. Our guess is that some of these landlords will become sellers, given how tight the sales market is currently, and that long-term rentals produce negative cash flows for those with max mortgages.

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