Condo Market Report - February 2023
Sales on TRREB for January were 3100 units. Almost identical to December’s numbers. Have we reached the bottom of the sales cycle which started in April and trended straight down. Our answer is yes. Sales can’t get any lower based on our population, but the real question is how high will the peak be for the Spring market? Historically sales at the peak are about two and half times the bottom. That would suggest 7,500 sales. Not a great spring market number.
In terms of prices, the year over year drops are not consistent between areas, property types and even as we measure price changes. The drop in ‘average prices’ is greater than the ‘Home Price Index’ which compares similar properties. ‘Average prices’ do not consider the change in the mix of sales. With the market downturn, more ‘less expensive’ properties are selling.
Price Changes in the 416 Over the Last 12 Months
Price Changes in the 905 Over the Last 12 Months
What is interesting is that price average price changes are similar between 416 and 905 for detached and townhouses. Condo decreases were less; explained partially because they experienced a smaller price increase in 2021 and early 2022.
The big take away is that the average price decrease is 5% higher than for the Home Price index. Since most media focus only on average prices, they are over stating what is really happening in the market!
WHAT IS HAPPENING IN THE MARKET NOW
1. Buyers do not want to look at properties that need to be upgraded. They want ‘move in’ ready properties. That is where sales are taking place.
2. We continue to experience a shortage of ‘saleable’ listings. This is impacting sale numbers.
3. Buyer strategy has shifted. It is ‘buy now’ if you can qualify for the savvy buyer to take advantage of todays lower real estate prices. Then refinance and ‘lock in’ when mortgage rates are lower. Those who have to wait for lower rates will find out that real estate prices will have increased to offset any potential savings.
Our rental analysis covers just the Downtown and Humber Bay markets. In January 1415 condos were leased. In February there were 2100 units available. The rental market is more active than normal for this time of year but we are seeing a market coming into balance. While rents over 2022 increased by over 10%, we are now seeing rents levelling off over the past two months. Tenant incomes are only increasing at about 5% which creates some sort of brake.
The Table below shows the number of condos leased in January and the average rent per condo style.
AVERAGE TORONTO RENT IN JANUARY 2023
1. In the two-bedroom market, tenants will pay an extra $400 per month for a second bathroom.
2. In the one-bedroom plus den market, tenants will only pay an extra $100 per month for parking.
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