2010 GTA Condo Market Reviews

[interchange42]

REALNET REVIEW OF 2010 REAL ESTATE RESULTS SHOWS NEW HOME MARKET UP; CONDO MARKET SURGES AHEAD FOR SECOND BEST YEAR EVER

Strategic Review of the Greater Toronto Area (GTA) Land & Residential Development Markets from Canada’s Leading Real Estate Information Service

Toronto, January 20, 2011 – RealNet Canada Inc., the most trusted central source for real estate information and information services in Canada, today released its 2010 Strategic Review of the GTA’s high-rise, low-rise and residential land markets.

remush

Among its results, RealNet’s review indicated that the GTA market saw the number of units sold in 2010 increase over last year, by nearly 3,000 units, reaching 36,803 total sales and representing $16.7 billion of value. Among those units sold, the high density sector (made up of apartments, lofts and stacked townhomes) reflected 55% of all units sold while realizing its second best year since 2000. Last year’s market also showed near record low levels of total active inventory.

“You can’t sell what you don’t have,” explains RealNet Canada’s President, George M. Carras. “Sales of low rise new homes decreased by 10% over 2009 and faced their second worst year since 2000 due to shortage of serviced lot supplies. The overall number of new home sales climbed, however, for the second straight year increasing by 8% over 2009 as the new condominium market continued its annual sales growth by 30% over 2009 with over 20,000 residences sold. Interestingly, the Downtown West submarket accounted for almost one quarter of the GTA’s total new condominium sales.”

The strong performance of GTA’s new condominium sector was further reflected in the pricing milestones the sector achieved in just the first month of last year. “The condominium market roared past the $400,000 average price threshold in January, and closed the year with an average price of $441,663. This demonstrates a year over year growth of approximately 11%,” says George Carras. “The low rise sector, despite slowing sales also pushed its average pricing index to new levels, exceeding the $500,000 threshold in October and closing 2010 at $503,190.”

Mattamy Homes registered the highest number of low rise home sales last year with over 1,800 units sold (this figure also made Mattamy the number one builder for overall sales). Tridel led the condominium sector with more than 1,200 sales, followed by Liberty Development Corporation’s 944 units.

The 905 area code continues to outpace the 416 in total sales (55% to 45%), but growth of new home development in the City of Toronto continues to climb.

“New home growth in the 416 Region is now almost double what it was ten years ago,” adds Carras. “Since the year 2000, the residential development industry in the GTA has seen apartment condominium product increase its total market share by 30%, while over the same period the industry has seen a 16% drop in market share of detached homes (from a 43% share of the market sales in 2000 detached homes account for just 27% in 2010).”

There were 233 residential land sales in 2010 totalling $1.4 billion in the various residential land types, including long term land, low density land, medium density land and high density land. The high density land sector saw the largest investments accounting for 46% of the transactions by dollar volume, as capital flows into residential land investments in 2010 increased by 77% over 2009.





About RealNet Canada Inc.

RealNet Canada Inc. is the most trusted central source of real estate information and information services in Canada, in both commercial real estate and new homes and condominiums. RealNet is the official source of real estate information for various organizations including BILD, the Toronto Real Estate Board (TREB), York University Schulich School of Business Program in Real Estate and Infrastructure.

About the RealNet 2010 Strategic Review

The 2010 Strategic Review Report on the GTA Residential Development Market is based on RealNet Canada Inc. research of asset sales of all residential land and residential serviced lot transactions in the GTA over $1 million from January 1, 2000 to December 31, 2010 as well as all active new home projects with more than 15 units in the GTA during the same time period.

 

[interchange42]

Urbanation has released some results from the 2010 condominium market which you may find interesting.

Which were the best-selling new condominium projects in the Toronto CMA in 2010? Drum roll please...

10. Yorkland at Heron's Hill by Monarch Corporation in North York. Designed by Graziani + Corazza Architects.

Solaris


9. Library District by Context Developments in the West Railway Lands. Designed by KPMB Architects.

8. Tango by Concord Adex at Concard Park Place in North York. Designed by Page + Steele / IBI Group Architects.

7. Westlake Phase I by the Onni Group of Companies at Humber Bay Shores in Etobicoke. Designed by Page + Steele / IBI Group Architects.

6. Treviso by Lanterra Developments in North York. Designed by Page + Steele / IBI Group Architects.

5. Five by Mod Developments, Graywood Developments, and Tricon Capital in Uptown. Designed by Hariri Pontarini Architects.

4. Parade 2 by Concord Adex in Concord CityPlace. Designed by Kohn Pedersen Fox Architects.

3. Liberty Place by the CanAlfa Group in Liberty Village. Designed by IBI Group Architects.

2. DNA 3 by Canderel Stoneridge and Tricon Capital in King West Village. Designed by Graziani + Corazza Architects.

1. One Bloor by Great Gulf Homes in Uptown. Designed by Hariri Pontarini Architects.

 

[interested]

I42
I am curious as to how Urbanation judges best selling projects?
Is it the most percentage sales of a project in a certain time period from launch?
For eg. 70% sales within say 6 months or is it say time to 95% total sales of a project or what exactly are they measuring.
Thank you.

 

[myfive]

Great posts interchange. Wonder how they determined the best selling condos...likely mostly # of units sold. I think of the Berczy that was a relatively small condo complex...but sold out so quickly! Seems like it should be honoured somehow. As for Five...where else could they rank it but #5?

Overall, the condo market continues to plow ahead. Should be a very strong spring the way things are setting up.

 

[carturo15]

Where is The Berczy?, they launched the project in May 2010 and they were sold out by November, it took them only 6 months to sell 165 units, most of them 2 bedrooms and large units

 

[UrbanVigor]

Best selling can be measured in terms of units sold, % sold, or speed sold. So this ranking is dependent on that determination.

 

[interested]

Yes, I was wondering what actual measurement they were using. It seems to me units sold is somewhat unfair to compare as a project with 1000 units vs. one with 100 units one would expect the 1000 unit project to sell more in a given time. To me, success would be defined as Percentage sold over a given time frame.

 

[interchange42]

I am sorry, but I do not know the exact answer regarding the method of determining top selling condominiums above, but I believe it refers to total number of units in each of those projects over the year.

Meanwhile, we have more about the market in general from Urbanation:

URBANATION SAYS “FOURTH QUARTER FLURRY” DRIVES
2010 TORONTO CONDO MARKET TO NEAR-RECORD SALES
Q4 2010’s 6,280 new Toronto CMA unit sales were the 4th highest quarterly total on record: with aid of robust resale activity, 2010 market powers to strong finish

FINAL – TORONTO – January 31, 2011...Urbanation Inc., the leading source of information and analysis on the Toronto condominium market since 1981, today released its Q4-2010 market overview.

For the second consecutive year, the Toronto CMA new-condominium market finished with a bang. A flurry of sales activity in Q4-2010 resulted in 6,280 new condominium units sold in the quarter. This represents an impressive rebound from the 3,805 new unit sales in the preceding Q3-2010.

Said Urbanation Executive Vice President and Editor Ben Myers, “The Q4-2010 new unit sales were much higher than expected, spurred by tremendous results at a number of new project openings in the City of Toronto. In the end, 2010’s total annual new and resale condominium sales of 37,041 units were just three per cent shy of the historic 2007 record of 38,306 units sold.”

Compared to 2009, 2010’s sales represent an increase of 20 per cent over 2009’s 30,939 new and resale condominium units sold. 2010 sales soared 27 per cent over 2008’s sales of 27,187 new and resale volume.
Myers added, “Even more impressive than the sales results were the number of construction starts, a Toronto CMA record of 18,221 high-rise condominiums started in 2010, more than twice as many as 2009. There are now 34,548 units under construction in the CMA in 132 projects”.

The key to Q4-2010’s strength, and the overall 2010 annual sales success, seems to have been a combination of developers continuing to restrain pricing at new project launches to appeal both to the general market, and to investors looking to acquire suites as future rental properties.

A 2010 Urbanation survey of condominium industry professionals indicates that their major concern with regard to 2011 sales levels will be affordability. In the Toronto CMA overall, the unsold unit index price for new projects (the average asking price of available product per square foot), rose eight per cent annually from $493 to $530 psf in Q4-2010. The unsold index price in the former City of Toronto was $646 psf in Q4-2010 and $723 psf in the Downtown Core.

Pricing in the resale market has flattened in recent quarters, but has risen six per cent annually from $352 psf in Q4-2009 to $374 psf in the fourth quarter of 2010. Resale index pricing in the former City was $487 psf in Q4-2010 and $518 psf in the Downtown Core. There were 3,538 condominium apartment resale transactions in the fourth quarter in the CMA, with the average unit selling for $339,000.

“Urbanation expects 15,000 to 17,000 new units to launch in 2011, with approximately 16,000 sales, representing a slight drop-off following the ‘boom’ conditions in 2010” said Myers, “Moderate growth is expected in the resale condominium market, and Urbanation is forecasting 17,000 resales in 2011.”

 

[interchange42]

Urbanation has released the Toronto CMA's Top 10 Condominium Apartment Developers by Sales for 2010.

10. Urban Capital Property Group. Not in the Top 10 the previous two years, Urban Capital is developing River City in the West Don Lands, Nicolas in uptown, Boutique in the core, and the recently released Tableau in the Entertainment District.

9. Lanterra Developments, which placed 7th in 2009 and 4th in 2008, which has produced many high profile projects in the city including most notably Maple Leaf Square, is currently selling condominiums at Ãce Condominiums at York Centre, Riverhouse at the Old Mill, and Treviso Condominiums in North York.

8. The Daniels Corporation, which was not in the Top 10 in 2008 or 2009, is currently completing work on many projects including the stand-out Festival Tower at the TIFF|Bell Lightbox. Currently in sales are One Park in Regent Park and Limelight in Mississauga, while a number of new Daniels projects will come on-stream in 2011 including Cinema Tower in the core, Paintbox Condos in Regent Park, and more.

7. Menkes, which was in 12th place in 2009 and 5th place in 2008, has many projects both in sales now, and soon to complete, including Aria in North York, Lumiere near College Park, Four Seasons Hotel and Residences in Yorkville, Gibson Square and Savvy Condominiums in North York, Pears On The Avenue in midtown, and One Sherway in Etobicoke.

6. The Monarch Group was 5th in 2009 and 8th in 2008. Monarch are currently building and selling Quay West at Tip Top, Couture in Uptown, Encore in Scarborough, Nautilus and Waterscapes in Etobicoke, and Legacy, Yorkland, and Ultra at Heron's Hill in North York.

5. Graywood Developments, which did not rank in 2008 or 9, is involved with FIVE Condominiums in Uptown, Ocean Club in Etobicoke, and The Mercer in the core. Graywood's landmark Ritz-Carlton Toronto is about to open.

4. Concord Adex repeats at 4th place from their 2009 ranking, ahead of their 2008 ranking of 11th. Concord Adex is known for their huge CityPlace project downtown, and their newer and similarly expansive Concord Park Place project in North York. Now on sale are Parade 2 downtown, and Tango in Nprth York. Coming soon to downtown is Quartz.

3. Liberty Development Corporation, which was 15th in 2008, repeats their 2009 ranking of 3rd. Liberty has concentrated in projects in Toronto's north end, and in York Region suburbs. Now under development and in sales are Metro Place Condos in Downsview, Liberty Place in York Mills, Thornhill City Centre and World On Yonge in Thornhill, EKO Markham Centre and Liberty Square in Markham, and Royal Gardens in Richmond Hill.

2. Great Gulf Homes rises from 8th in 2009 and 14th in 2008. Great Gulf is involved at One Sherway in Etobicoke, is finishing Mies van der Rohe-inspired X and starting sibling X2 in uptown, as well as starting their landmark One Bloor project at Bloor and Yonge.

Number 1 on the list will not likely be a surprise to those familiar with Toronto's condominium scene; in the same position as they were in 2008 and 2009, is Tridel. Tridel's huge repertoire on condominiums currently under construction and in sales includes Solaris and Ventus at Metrogate in Scarborough, 300 Front Street West in the core, West Village in Etobicoke, Blythwood at Huntington near Sunnybrook, One Old Mill in Bloor West Village, and most recently Aristo at Avondale in North York.

 

[BMyers]

Just as a clarifiaction, the top 10 projects are based on total sales January to December 2010.

The Berczy finished in 42nd!

 

[interested]

That may be numberically interesting but kind of a poor way to judge projects.

For example, a huge project like 1 Bloor with about 700 units is going to be comparing its sales to a boutique building like Museum house with about 22 units.

If 1 Bloor sells 230 units, it has sold only a 1/3 of the project but if Museum house sells 20 units, it sold out 90% of the project. Yet by numbers alone, one would say 1 Bloor is a much more successful project.

 

[myfive]

Received this from my agent (Remax) based on the analysis they do. Looks like 2011 is shaping up to be a decent year (as expected!)

The Toronto Real Estate in 2011 will be steady and decidedly unexciting for those who want wild swings in prices and sales volumes. Mortgage rates will fluctuate in a narrow band. Governments heading into elections are unlikely to announce more taxes for consumers, and the economy will slowly gain strength in the Toronto region which will mean both reported and the growing unreported incomes will be higher.

What to expect in 2011:

1. Toronto resale volume will be the same as in 2010. Prices will increase by 5% (probably later part in the year). The best time for buyers will be in the first quarter of this year. Most experts will not recognize the strength of the real estate market until the third quarter.

2. The downtown condo market will see sales increasing by 10% and prices up by 3-5%. Condo rental rates will increase by $100 per month on average. The current vacancy rate for the rental condos is under 1% and for apartments it is about 2%. Condos are renting in 10 to 15 days on average. Expect that trend to continue.

3. Bigger condo units are now selling at the same price per sq ft as smaller ones. Going forward, two bedroom plus units will sell for more per sq ft then one bedroom units.

4. More and more units will be sold by Assignments rather than resale as investors of pre-constructions units opt to sell rather then to rent out their units.

 

[interested]

I like Jamie Johnson and this is his prediction. He has been quite accurate in the past.

I hope he is right but I suspect #1 is somewhat wishful and #2 will prove wrong in that prices will not increase for the year as a whole though there may be some incentive to keep prices up until mid March and the new mortgage rules causing some to rush into the market.

I do believe #3 and #4 may well be correct especially as relates to the assignments.

But then, I am not an "expert". Of course, my livelihood also doesn't depend on prices increasing and making sales.

 

[UrbanVigor]

2. The downtown condo market will see sales increasing by 10% and prices up by 3-5%. Condo rental rates will increase by $100 per month on average. The current vacancy rate for the rental condos is under 1% and for apartments it is about 2%. Condos are renting in 10 to 15 days on average. Expect that trend to continue.

I didn't realize that rental vacancy rates were that low, especially given that I think it's a renter's market these days. With the many new condos being built downtown, I was worried there might be over supply. Is there really a lack of condos available downtown? If so, this forecast of increases in prices and rents makes sense.


3. Bigger condo units are now selling at the same price per sq ft as smaller ones. Going forward, two bedroom plus units will sell for more per sq ft then one bedroom units.

Especially with new developments, units are getting smaller and smaller. You'll be hard pressed to find 1 bedrooms in the 600sf range anymore. Two bedrooms won't sell more psf than one bedrooms not just because of a lack of supply but because some people who would otherwise be happy with a 650sf 1 bedroom may choose a 745sf 2 bedroom versus a 550sf 1 bedroom choosing space over a second bedroom.


4. More and more units will be sold by Assignments rather than resale as investors of pre-constructions units opt to sell rather then to rent out their units.

An expert can chime in, but this makes sense because I don't see that there is that great of an investment opportunity with most new developments these days due to it being a renters market (and will that $100 average increase in rent be enough?) and with a minimum 20% down (plus closing costs, etc.). Seems to be easier to gain from short term appreciation than to carry negative cash flow through to a future sale. However, over a shorter term this is an increased risk as prices could fall.

This seems to have been an objective forecast. Usually when I read a forecast, I'm not sure what to think and only know that it can go either way.

If there really is a lack of supply in downtown condos then, yes, prices will go up. But at the same time, rising employment and salaries will be required to sustain these price increases.

 

[interested]

^^^
I think some of the shortage has to do with distribution. Condos are in more demand than apartments as the apartments are old and don't have all the bells and whistles that people like. However, apartments generally have more usable living space, but smaller bathrooms and often less desirable kitchens.

I would be suprised if rents increase by $100. The reality is that people can't afford $1500-1600 for a 1 bedroom. Wages are not going up that much and a $100 is an 7% increase on $1400 for entry level 1 bedrooms. So I would expect resistance.

Another issue would be the timing of the new developments and when they come on line. I believe there is alot of product to come on linelater in 2011, and in 2012 and 2013 but perhaps someone can add some facts to this projection ( I am talking about downtown core condos). So I would think this in turn would put downward pressure again on rents.

There was a brief period in late 2008 and early 2009 where some launches were postponed and some projects cancelled. So presumably for those that in theory would have made it to market in 3 years, there might be a bit less product in 2011/2012 than there might have been.

I agree Urban Vigor with your statement that over the shorter term appreciation over negative cash flow at these prices may mean an increase of product for sale therefore putting presumably downward pressure on prices.

The other trend I would see happening is if prices in downtown do go down, people will leave mid town, North York and other areas and move downtown and maintain their say $1400/month payment but instead of paying it out of the core, will choose to continue to pay $1400 but move to the core if they work there for time and transportation cost issues as well as availability of all the core has to offer.