Tipping Point? Downtown Condo Prices Fall, Inventory Soars

The numbers are in for November and it isn’t pretty.  TREB just released their sales figures for the month of November and unlike last month, we can now say that for the resale downtown condo market, prices have fallen.  Let’s just get right into the numbers.

• In C01 (downtown west), condo sales are down 61%, average prices are down 11%, and inventory is up 90%. The number of sales as a percentage of active listings was 13% versus 64% last year.
• In C08 (downtown east), condo sales are down 51%, average prices are down 9%, and inventory is up a staggering 164%. The number of sales as a percentage of active listings was 15% versus 83% last year.

Compared to October 2008 (last month):

• In C01, condo inventory has increased by 6% and sales decreased by 40%
• In C08, condo inventory has increased by 15% and sales decreased by 41%

Upon first glance it looks like this must be the crash taking place that the pundits have long been predicting. Possibly, but let me point out a couple interesting facts:

• In C01, average prices of condos were down 11%, but the median price was down only 3%.
• Similarly, in C08, average prices of condos were down 9%, but the median price was down only 3%.

What am I getting at here? If you believe that the median price is a more accurate measure of the volatility in the market, then things aren’t as bad as they seem. Or another way to look at it is the numbers from 2007 were skewed because of the disproportionately high number of sales of high-end properties (people rushing in to buy before the Toronto Land Transfer tax kicked in). John Pasalis of Move Smartly is a proponent of this theory and has written a couple posts about this here and here.ÂÂÂ

So what do the numbers from this month mean?

1. For Buyers - December could be good month for you. With about 1200 available condos to choose from in the downtown core (versus about 600 last year), and very few buyers to compete with, the time is now to put in that low-ball offer you could only dream about just 3 months ago.ÂÂÂ
2. For Sellers – This would be a good time to take your property off the market if you don’t absolutely need to sell. Consider trying your luck again in the new year, but be warned, there may be hundreds of others who will use the same strategy.
3. For Investors – The resale market is suddenly looking more promising. “Positive Cash Flow” is no longer an impossible dream. Buying in a market like this is not for the faint of heart, but go out and find the desperate corners of the market and you may be rewarded.

Nov 2008 Downtown Condo Stats

ÂÂÂ

If you haven’t already, check out my post from last month with a similar look at the downtown condo numbers entitled: “Is the Toronto Condo Market Crashing?“