These days, investors looking at condos are instead seeing con-don’ts.
Driving the news: The majority of new condo investors in Canada’s largest city are already losing money on their properties, according to a report by CIBC and Urbanation. On average, those who closed on a condo in 2023 are losing nearly $600 a month.
- And things aren’t looking up: A surge in new listings caused the average rent price for a condo in Toronto to fall last quarter for the first time since 2021.
Why it matters: The recent losses are killing investor and developer appetites, with the construction of 24,000 new condo units, which have been on ice since late 2022, stopped indefinitely. This is troubling for Toronto’s housing supply, as condos are the GTA’s top driver of new home construction.
- “The math doesn’t make economic sense from both the demand side (investors) and the supply side (developers), leaving the market at a standstill,” wrote CIBC economist Benjamin Tal.
Big picture: Increased investor involvement in real estate has been blamed for driving up prices, but the truth is Canada’s housing market is stuck relying on those investors to drive demand. Developers aren’t going to build enough homes if investors aren’t interested.—QH