Friday, June 19, 2009

Condo resales are on a roll

The new-condo market may be just starting to warm up again but the resale market is hot, according to May statistics from the Toronto Real Estate Board (TREB). In fact, condo resales, at 2,081 units in May, were up about 2 per cent from the same month a year earlier.

Condo resales are again moving in lockstep with single family homes and townhouses.

In May, total Multiple Listings Service (MLS) condo sales were 4,561 units in the Greater Toronto Area, compared with 4,422 in May last year – a 2 per cent increase.

The average selling price for all MLS sales (including both houses and condos) was $399,811, down a touch from $400,817 last year.

While condo resales were up, listings were down, says Jason Mercer, senior manager of market analysis at TREB. The upshot is that more buyers than sellers means resale condos are moving with great speed – often as little as a week on the market – and the best ones are drawing multiple offers.“Sellers here in Mississauga are getting between 85 per cent and 105 per cent of the listing price,” says Debbie Cosic of Sutton Group Signature Realty Inc. of Mississauga. “In highly sought after areas like Lorne Park just north of Lakeshore Road and Mineola, near Highway 10 and the Queen Elizabeth, you will see three or four offers and suites moving within a week, often at more than the asking price.

“Calls to our office are up 60 per cent from March and showings of properties are up about 60 per cent as well.”

In the City of Toronto, downtown west (the area west of University Avenue to Dufferin between Lakeshore Boulevard and Bloor) leads the action, says Brad Lamb of Brad J. Lamb Realty Inc. “Those leading all the activity are first-time buyers and move-up buyers,” he says. “Both are taking advantage of terrifically low mortgage rates, and the move-up buyers are finding they can easily sell existing condos at a good price.”

Now about prices: TREB says the average condo price in March was $266,958, which is down about 4 per cent from last year. But while that may look great on paper, average price figures can be misleading, says Mr. Lamb.

In May, the softest sector of the market was anything selling for $1-million and up. Take away the impact of those sales on average prices and you are likely to find that resale condos are actually pricier than they were last year and quietly ticking upwards.

“I sold a suite in March for $245,000. In May, I sold the very same design, in the same building but on a lower, less desirable floor, and it went for $260,000,” says Mr. Lamb.

So what is moving? Suites priced at less than $400,000, says Ms. Cosic and especially those in the $250,000 to $300,000 range. Why? One of the chief factors is the availability of mortgage money at extraordinarily low rates.

“You can get a variable-rate mortgage for as low as 1.75 per cent if you have great credit,” she says. “That means a buyer can snap up a $400,000 condo and wind up paying about $600 a month in mortgage payments.”

Mortgages insured by the Canadian Mortgage and Housing Corp. also make it easy for first-time buyers to pick up a resale condo with just 5 per cent down, although conventional mortgages will demand a 15-per-cent to 30-per-cent down payment to close a deal.

For sellers, establishing the right listing price is crucial for a quick sale, Ms. Cosic says.

“A year ago, if your neighbour got $299,000, you might list your suite for 26 per cent more,” she says. “Not in this market. List it for $299,000, the same as an identical suite, and you will probably draw multiple offers in a week or two.”

Finally, what does the summer hold for buyers and sellers? There's likely to be continued strong demand for resale condos and probably higher prices, says TREB's Mr. Mercer.

Mr. Lamb agrees. The fears about job security, which gripped buyers last fall, are starting to subside, he says. Many singles and young couples who put off home-ownership plans through the fall, winter and spring now see opportunities for great deals at reasonable prices. Low mortgage rates are a strong incentive to buy now lest they start to rise in the fall.

“Resale buyers are a breed apart from those who buy new condos,” he says. “They don't want to wait two or three years. Their personal circumstances demand they buy now.

“What they see all around them is the perfect time to act.”

Source: Terrence Belford
From Friday's Globe and Mail, Friday, Jun. 19, 2009 03:54AM EDT

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