Condo Market Report - July 2021
June marked the third month in a row of declining sales. The all time peak in sales was March on the Toronto Regional Real Estate Board. That is not a bad thing and at over 11,000 sales it was the third best June sales month. We can also forecast that 2021 will be the biggest sales year ever, at 117,000 units. Compare that to previous years. (See graph 1 below).
But there is another trend emerging. Note, we refer to the Regional Toronto Board. In the past we compared sales within the GTA – 416 vs. 905. But in June about 24% of all sales took place outside of the GTA – Hamilton, Waterloo, Cambridge, Guelph, Barrie, etc. Covid-19 accelerated this trend as buyers with their agents moved out of the GTA. Hence sales numbers today are not strictly comparable to those of ten years ago.
What is more important to market watchers is the supply of listings. At the end of June, ‘active’ listings equalled June sales. A one-month’s supply is a strong indicator that prices will continue to rise. ‘New’ listings in June were equal to those of June last year while sales were 28% higher than last year. We refer you to last month’s issue where we compared new and active listings to sales over the last three months and over the last three years.
Looking at the condo market, sales in June were 56% higher than for June last year versus a 28% increase for the overall market. Zeroing in on the Downtown market for condos, sales were 63% higher than a year ago. In Humber Bay the increase was just 11%. At the same time, both ‘new’ and ‘active’ listings Downtown were down 15 and 19% respectively from a year ago. In Humber Bay, new listings were unchanged and active listings were down 14% from last year. While the price increases were stronger in Humber Bay in 2020, the reverse is happening in 2021 with Downtown being the best performer.
For the second half of the year, overall sales will be lower, but prices will continue to increase. The gap in prices between condos and low rise which increased in 2020 will start to revert due to affordability issues as more people re-enter the condo market.
TRREB Yearly Sales 2021
ARE DOWNTOWN CONDO PRICES BACK TO 2019 LEVELS?
With Covid-19, many buyers and renters moved out of the Downtown market. The result was that this market was the hardest hit in terms of falling sales and lower prices. So, are we back to 2019 prices? We looked at sales in three buildings from 2019 through to 2021: 75 East Liberty in Liberty Village (popular with young professionals); The Spire at 33 Lombard (which is popular with older professionals working at King and Bay); and College Park at 763 Bay (which appeals to U of T students and Asians in particular).
The answer to the question is YES! In most instances, prices are now higher than in late 2019. See Graph 2.
Just under 3,000 condos were leased in June for the Downtown/Humber Bay markets. This is the biggest month in 2021. The peak for the leasing market is July and August. In terms of the mix of leases, over half were in the one-bedroom and one-bedroom plus den segment. Rents averaged $1800 for the one bedroom and go up to $2,000 for larger units with a den. Currently there is less than one month of ‘active’ one-bedroom listings, so expect rents to increase through September.
The two-bedroom market has increased in popularity with over 600 units leased in June. The average price remained in the $2600+ range. Studio or bachelor units are becoming more popular and the rent has moved up to $1500 on average.
The burning question is what will happen to rent controls? Rents for all units were frozen in 2021. But many landlords reduced rents in 2020 because of Covid. All units completed prior to 2018 will resort back to a legislated increase in the 2% range for 2022. Those condos completed after 2018 are not subject to rent controls in 2022 and theoretically, landlords are free to increase rents back to market levels. Note these legislated increases only apply to existing tenants and not to new tenants.