As we pointed out in our last Report, the market is starting to improve. March sales as reported by TREB at 6171 units were only 7% lower than in 2008, and higher by 50% over February. Last year, the February to March increase was only 10%. My other comment in the Report was that the house market turned down sooner than the condo market. It now appears that the house market is turning up sooner than the condo market. In other words, the house market seems to be a lead indicator as house sales in March were only down by 3%, while condo sales were off by 11%. Downtown condo sales were slightly better than the overall condo market, as sales were down by just 7%.
We can safely say that we have passed the bottom of the market in terms of sales activity. That would also imply that we are near the bottom for prices. While prices are lower than a year ago - high end about 10% and entry level 0 to 5% - prices have stabilized. So why is there a lot of inventory in this market? There are still sellers holding out for last year's prices. And because we have minimal Power of Sale properties, sellers don't have to sell at any price. Sellers who list at today's prices are selling in less than 30 days. Buyers who have been sitting on the sidelines for the last six months will now find themselves competing for well-priced properties. The good news is that prices will not be moving upwards for the next few months and it will take over a year to get back to early 2008 prices.
This month we looked at sales at 44 Gerrard, (one of three towers of The Liberties) at Bay, just south of Carlton. It has been a popular condo complex for over 15 years. A two-bedroom unit with solarium and parking sold last month (March of '09) for $335,000 - near the bottom of this price market. The very same unit sold in 2003 for $276,000 which represents an increase of just 21% in 6 years. But to get a better feel of the market, an identical unit sold at the end of 2007 for $349,000. That was very near the top of the price market. So prices for this unit have come down just 4% from the peak. The point to be made is that the resale condo market has not been speculative but stable in pricing. This unit, at just under 1100 sq.ft, is selling at $310 per sq.ft. Proof that there are some great buys in older condo buildings! The second unit we looked at was a one-bedroom unit with solarium and parking which sold in February of this year for $250,000. The very same unit also sold in 2003 for $187,000 which represents an increase of 33% over 6 years. A year earlier, a similar unit sold for $280,000 at the peak of the price market. These smaller units are more expensive at $375 on a per sq.ft. basis. Still they are about $75 per sq.ft. cheaper than newer resale condo units and over a $100 less than new development projects.
One of the reasons why condo prices are firming up is that many investors in new developments that are ready for occupancy have decided to rent out their units as opposed to trying to flip them into the resale market. The end result is that condo rentals are softening. A record 241 one-bedroom units were leased in March, the most popular being a one plus den with parking which averaged $1500. It is interesting that a one plus den without parking leased for the same amount as a one bedroom with no den but parking - at $1400. There were 135 two-bedroom units leased, ranging from $2000-2200. Parking is worth about $100 per month and a den is worth slightly less for two-bedroom units. Rental prices are down slightly from that start of the year and are off by $100-150 per month from the peak last summer.