Condominiums may have lost their attraction as a solid investment, since the sector is exposed to a downturn, the real estate expert say that they are likely to worsen.
In a survey for mortgage and insurance aggregator rates of the group Ltd. If 30 percent of the respondents agreed with the declaration that “condominiums used to be a good investment, but no longer”, while 57 percent stated that they do not buy a condominium for any reason.
“The condominium market in South Tontario is not doomed to fail as if everyone is falling, but it is doomed to fail as if there was no investor interest in buying a condominium for at least two or three years,” said Ron Butler, a mortgage broker at Butler mortgage, and added that the cash market of 75 to 80 percent investor operated Investors is.
Higher interest rates are often given as a reason for a lackluster real estate market, but they are not necessarily responsible for the death of the model of condominiums as an investment model.
Butter said “The True Killer” was that investors who have commissioned a condominium for an example of $ 1,400 per square meter for a 500 square meter unit-now unit now have to do with a market at 1,400 per square foot.
They made “the assumption that it would increase in this way, so that when they finally came to close, all sold for $ 1,500 or $ 1,600 per square foot,” said Butler.
“But that was like an incredible error of judgment. Many people had only good results for 10 years and simply continued (but) everything is not good anymore. I'm more sorry for people.”
The Canadian condominium market – with Toronto, which is a large part of the sector – has recently been on ropes.
“New ownership sales fell by 95 percent compared to the market summit in early 2022. I do not think that we can get really lower for sales activities,” said Shaun Hildebrand, President of Urbanation Inc., which provides Condo and rental market research for the area of ​​the Toronto area (GTA).
Butler said that there were no condominium sales before construction in the past 13 months in South Tontario, whereby projects do not go beyond the 75 percent threshold values ​​for sales that would allow them to receive loans.
The sales of condominiums in the city center of Toronto decreased by 22 percent and in the GTA last year by 27 percent, as the latest market report by the Regional Real Estate Board (TRREB) in Toronto emerged. The active lists in the apartment sector of the condominiums are on the rise this year and rose from 6.237 in January to 8,659, while another 30,000 residential units are to be completed in 2025, said Hildebrand.
Nevertheless, he said that the prices in the GTA are “slowly lower” instead of being expected.
For example, the prices for condominiums in the city of Toronto went by 1.5 percent and in March a previous year in the GTA in the GTA.
However, the resale prices in the GTA fell by 16 percent of its climax in early 2022.
Hildebrand said he assumed that prices will continue to sink because more investors are forced to add their units to the growing number of lists.
“The owners held values ​​because they paid premium prices,” he said. “There was a kind of general expectation that the market would improve, although interest rates would move lower, but now the view with trust is really very, very cloudy. Since sales are so high, there will probably be further downward pressure on the prices for condominiums.”
But the bad news doesn't end there because Hildebrand said
More units are completed that have been more than what they are currently worth.
“There will be more failures, complaints, unfortunately project candy and increasing inventory,” he said. “It is certainly a rough period, but at some point it will be worked through. It will only take some time.”
• E -Mail: gmvsuhanic@postmedia.com
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