SALES COMMENTARY:

February was a solid month for sales – 6,300 suites as reported by the Toronto Real Estate Board. Sales were 14% lower than February of 2010 (a record) but consistent with numbers recorded for February sales in 2008, 2007 and 2006. It is hard to understand why some experts keep calling for price corrections when ‘active listings’ are equal to last year at this time, and ‘new listings’ in February were down by 9% from February of 2010. If prices are to decline, the only statistics worth tracking are the number of ‘power of sales’ and ‘mortgage arrears’. Why? Prices only decline when people are forced to sell. Otherwise if people do not get their selling price, they just take their property off the market.

Currently both statistics are about 50% of the levels recorded in the last price correction in 1989. Experts also point to the change in amortization rules this month on CMHC insured mortgages from 35 to 30 years as having a big drag on the market going forward. While theoretically this makes sense, the reality is that most buyers right now are NOT concerned about this change. We are seeing very few deals that require a 35 year amortization; and there are a lot of buyers waiting for the summer market and hoping to see an increase in the supply of listings! The end result will be a strong summer market with prices remaining at current levels.

The condo market continues to outpace the overall market in terms of sales. Downtown, condo sales in February matched those of last year. The sale-to-listing ratio (a key indicator of price trends) was just over 40% in February this year versus 55% last year. A balanced market is 35%. While there are more condo listings this year, there are also more buyers. The Etobicoke Waterfront condo market continues to under perform the Downtown market.

Preliminary numbers for March suggest overall sales of 9,500 suites – about 9% lower than in 2010. For the Downtown condo market, we expect sales for March to be 15% higher than in 2010!

In this report we looked at sales at Maple Leaf Square, and in particular 65 Bremner. While the building has only been occupied for a year, there is lots of interest about prices, given its prime location. The first suite we tracked was 554 sq ft one bedroom (no locker or parking). A suite sold in November for $340,000 and the identical suite sold in January for $352,000. The $12,000 difference can be traced to a 30 floor differential of $400 per floor.  A lesson: never pay a $1,000 per floor premium for new construction, $250-$500 is more the norm. This particular suite is selling at just over $600 sq ft. There are also two identical suites, for sale at present, on lower floors at $355,000 and $358,000 which seems a touch high! The second suite we looked at was slightly smaller, at 490 sq ft, also a one bedroom (no locker or parking). There were three sales of this suite, starting in October and ending in mid-March, starting at $290,000 and ending at $318,000. Prices are certainly rising in this building at almost 15% annually, which tells you that this is an ‘in demand’ condo building. Expect to pay in excess of $600 sq ft.

RENTAL COMMENTARY:

January is usually a busier month for rentals than February, but not this year as 13 studios, 255 one bedroom suites and 164 two bedroom suites were leased out. Studios/bachelor suites at $1,250/mo, on average, were unchanged from last month. One bedroom suites increased on average $50/mo. to $1,500 for one bedroom without parking to a high of almost $1,675 for parking plus den. Rents for two bedroom suites also increased about $50 from last month and now range from $1,900 up to $2,400 for parking plus den. A primary reason for an increase in rents (as we forecast) is the HST which has impacted utilities and indirectly condo maintenance fees.

Source: Jamie Johnston, Broker of Record, ReMax Condos Plus Corp., Brokerage. 2011