September was another solid month for sales, which clearly confirmed the upward market direction of this market. Sales were 22% higher than for September of last year. But this number is also slightly below the peak September years of 2016 and 2015. We continue to look at Listings as a future indicator. ‘New’ Listings for the month were 2% lower than last year and the current level of ‘Active’ Listings is 14% lower than a year ago. Again, supply is holding back this market. In terms of the condo market, sales in September were 16% higher than September of 2018 and listings were unchanged from a year ago as ‘new’ listings’ for the month were lower than the ‘active’ listings at month’s end which means supply continues to fall.
The end result is higher prices. For a sustainable market, we need prices to increase by approximately 4% per year to maintain a balance and ongoing affordability. Currently, we are running at 5% on average for the overall market. Yes, prices are lower in York Region from a year ago but that is the only area as prices are 7+% higher in Peel and Halton Regions.
This graph plots the average price of Toronto Condos since 2013. We can see that the average annual increase is 9.7% each year. This has resulted in a narrowing of price differences with the low-rise market and slower sales.
The downtown condo market continues to lead all rental activity. The area bounded by Bloor St. to the north, and between the DVP and Dufferin to the west accounted for 43% of all condos rented on TREB in the Third Quarter of 2019. This figure was 22% higher than for the same period in 2018. This supports our view that most new condos downtown are being absorbed into the rental market.
Further proof can be found in the rental rates for various sizes of condos. Studio prices are now averaging $1950 per month (which is just under $5/ft per month). The one-bedroom market starting at $2300, without parking or a den, is over $4.50/ft per month.
The two-bedroom market ranges from a low of $3100 per month to almost $3600 when you include parking and a den. The three-bedroom market remains in the $4500 per month range.
For investors, expect rents to average $4.50/ft per month as the bottom ask for any purchase.
We are now in the Fall market when rents usually soften. But strong demand has resulted in rents remaining at summer levels. While the rental market does show a number of list price (rent) decreases, it is because investors, aware of rent controls, want to maximize the rent at the outset so don’t be fooled by this trend.
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