Cooling condo market will make housing affordability worse, Minto CEO says

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A cooling market for investment condos is likely to make housing affordability worse instead of better, according to the CEO of a major housing developer.

Ivonne Flores Kauffman, BNN BloombergMichael Waters, CEO of the Minto Group, joins BNN Bloomberg to talk about building more homes to boost affordability.

Michael Waters, CEO of the Minto Group, told BNN Bloomberg in an interview Monday that a slowdown in demand from investors in new condominium units is bad news for the overall housing market because it means new units won’t get built, exacerbating the supply problem.that more than three-quarters of new condo investors with mortgages in Toronto were cash flow negative on their units.

“You need those pre-construction sales as critical conditions for bank construction financing,” he said. “Without presales a project is just not going to start as presales don’t materialize, construction on condos won’t happen,” he said. That’s bad news for policymakers who are trying to increase the number of new units to keep up with the surging population.In addition to securing financing for new projects, Waters says another big hurdle that developers face is Canada’s regulatory regime. A recent World Bank report ranked Canada 33 out of 34 developed economies when it comes to the amount of time it takes to get construction approvals.

Waters welcomes government initiatives such as Ottawa’s National Housing Plan and the Ontario government’s Bill 185 to speed things up, “but we need to do a lot better,” he said.

 

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