Labour Day has passed and for some that means the summer has ended. Vacation time is wrapping up, students are heading back to school, and the real estate world will be shifting into its fall season. The summer had a slow start, but sales were up year-over-year in July and the prices of condos in Toronto continued to climb. Looking ahead, what can we expect this fall?
Two-bedroom condos moving slowly beyond next exit
Based on what we’ve seen this summer, we are expecting the fall real estate season to perform similarly to 2017, with slower activity than 2016.* Looking at the current market absorption rates for Toronto condos in separate price groups, we can see that larger units (two and three-bedroom condos) are taking longer to sell on average, with market absorption rates in the range of 50 to 140 days. Anything under 120 days should be considered a strong Seller’s Market.
With the prices of condos for sale in downtown Toronto continuing to rise, right now at an average of $971 PSF, larger units over $1,000 SQFT are becoming a much greater financial consideration for active buyers if not downright unaffordable. The question for many is likely whether to buy in downtown Toronto or look elsewhere in the GTA or further afield. In downtown Toronto, you’re looking at a $1M two-bedroom condo versus the possibility of a freehold house somewhere else. For young families, especially, whether to stay or go will be a big part of the decision to buy this fall. Finding family-friendly condos in Toronto can be tricky, but a development trend we are noticing among new condos may start to make that easier. More on that point below.
One-bedroom condos are a hot commodity
While larger inventory, units over $1.5 Million, might be moving slowly this fall season, inventory below that price-point was moving quickly this summer, with high demand for one-bedroom condos in Toronto. We expect that trend to continue. In particular, we expect one-bedroom condos with parking spaces to be flying off the shelves.
One-bedroom condos are still selling in multiple offer situations with final sale prices at or above the initial asking price, sometimes $100K above asking. The one-bedroom price point, roughly $500-700K, is very attractive for first-time buyers and investors. First-time buyers are looking for a real estate entry point, and one-bedrooms or studios are simply all they can afford. Investors like one-bedroom condos because they are a high-demand commodity in the rental market, which translates into a cash-flow positive investment.
The changing impact of parking spaces
Parking spaces are also becoming a hot commodity in the Toronto condo market. One-bedroom condos with parking spaces are experiencing a real estate rush right now. One of the main reasons is that developers are decreasing the number of new one-bedroom condos with assigned parking spaces, preferring to give parking to larger units in the building. We suspect this move among developers is in recognition of a new demand in Toronto for family-friendly condo apartments in high-rise, high-density buildings. Developers are eliminating parking for anything under two-bedrooms in the downtown core, perhaps to increase the appeal of larger units among young family buyers.
One-bedroom condos with parking are becoming a rare product. That being so, this fall might actually be a smart time to put your one-bedroom with parking on the market. Taking advantage of the high-demand seller’s market to sell your condo this fall could put you in a great position to then increase your square-footage with a purchase in the December slowdown.