C
circuitboy84
Guest
RE/MAX CONDOS PLUS REPORT
My last commentary focused on seasonal changes to the real estate market. Results from September and mid-October sales suggest that the market itself is now changing. No, we are not in a market correction such as the U.S. is experiencing in many over-hyped markets, but rather we are moving from a sellers into a more balanced market. The signs are there: while prices are still moving upwards (at moderate rates), sales volumes are lower, and listing inventory is rising. These changes have taken place in just the last six weeks. The TREB reported in September that residential sales were 10% lower than the same month a year ago. Active listings are up 15%. Overall condo sales were also off by 9% in Septmeber. Remember also what we said in our last Report, the Downtown Market would outperform suburban markets going forward. Downtown condo sales were 8% lower than for September last year, and the sales-to-active listing ratio has moved from 38% ro 33% (the high end of a balanced market which is 25-35%). The condo market is still strong - there are lots of buyers but there is more choice. Sellers need to be more realistic in their expectations. The Etobicoke Waterfront, which has trailed the Downtown market, imporoved in September with sales ahead of last year and the sales-to-active listing ration increasing to 28%. At one point this year it was at 18%!
The fundamentals for a strong condo market remain in place. Condos are the affordable option for most buyers. prices have not increased so quickly that buyers have been priced out of the market. Job growth and employment incomes can certainly support the activity levels of today. And at the end of the day, people need to live somewhere. Condos are not a commodity that can be traded like oil futures, or gold, and that is something most economists tend to forget. This month, we looked at condo sales at Palace Pier on the Etobicoke waterfront. This is an older building with numerous amenities including valet parking. however its real appeal is the size of the units. Not only are they big, but also there is a decent supply of three bedroom units. The three bedroom unit we tracked was 3250 sq. ft. with two parking spots. The challenge in tracking prices is that not all of these units (all on high floors) have been renovated over time. Starting in 2001 these units were selling for just under $600,000. In 2004, a renovated unit sold for $760,000 and the same unit sold a year later $812,000. This year, a unit that needed a complete renovation sold for $680,000. Prices per sq. ft. are in the $275 range, which is still cheap. The demand for this building has not been strong in this market because younger people want smaller units and they will not pay the high condo maintenance fees of 60 cents per sq. ft. (event hough utilities are included) which amounts to $2000 per month. Our guess is that this building will come back into favour when baby boomers sell their big homes and want comparable condos, which cannot be found at any price in the Downtown market.
My last commentary focused on seasonal changes to the real estate market. Results from September and mid-October sales suggest that the market itself is now changing. No, we are not in a market correction such as the U.S. is experiencing in many over-hyped markets, but rather we are moving from a sellers into a more balanced market. The signs are there: while prices are still moving upwards (at moderate rates), sales volumes are lower, and listing inventory is rising. These changes have taken place in just the last six weeks. The TREB reported in September that residential sales were 10% lower than the same month a year ago. Active listings are up 15%. Overall condo sales were also off by 9% in Septmeber. Remember also what we said in our last Report, the Downtown Market would outperform suburban markets going forward. Downtown condo sales were 8% lower than for September last year, and the sales-to-active listing ratio has moved from 38% ro 33% (the high end of a balanced market which is 25-35%). The condo market is still strong - there are lots of buyers but there is more choice. Sellers need to be more realistic in their expectations. The Etobicoke Waterfront, which has trailed the Downtown market, imporoved in September with sales ahead of last year and the sales-to-active listing ration increasing to 28%. At one point this year it was at 18%!
The fundamentals for a strong condo market remain in place. Condos are the affordable option for most buyers. prices have not increased so quickly that buyers have been priced out of the market. Job growth and employment incomes can certainly support the activity levels of today. And at the end of the day, people need to live somewhere. Condos are not a commodity that can be traded like oil futures, or gold, and that is something most economists tend to forget. This month, we looked at condo sales at Palace Pier on the Etobicoke waterfront. This is an older building with numerous amenities including valet parking. however its real appeal is the size of the units. Not only are they big, but also there is a decent supply of three bedroom units. The three bedroom unit we tracked was 3250 sq. ft. with two parking spots. The challenge in tracking prices is that not all of these units (all on high floors) have been renovated over time. Starting in 2001 these units were selling for just under $600,000. In 2004, a renovated unit sold for $760,000 and the same unit sold a year later $812,000. This year, a unit that needed a complete renovation sold for $680,000. Prices per sq. ft. are in the $275 range, which is still cheap. The demand for this building has not been strong in this market because younger people want smaller units and they will not pay the high condo maintenance fees of 60 cents per sq. ft. (event hough utilities are included) which amounts to $2000 per month. Our guess is that this building will come back into favour when baby boomers sell their big homes and want comparable condos, which cannot be found at any price in the Downtown market.