New condo sales in the Toronto region dropped to their lowest level since the 2009 financial crisis, with investors balking at lofty purchase prices and higher borrowing costs.
Mr. Papailias said his firm used to handle an average of 300 preconstruction sales a day. So far this year, there has been an average of 500 preconstruction sales per month.raised interest rates to cool inflation. Preconstruction buyers do not take out a mortgage until their condo unit is built and that process can take several years. However, they still need to show developers up front that they can qualify for a loan when the condo building has been completed.
Investors would have to charge more than the going market rental rate to cover their mortgage and other condo-related costs. “It’s very difficult for investors to make the numbers work on buying new condos, given their record high price premium over resales and steeply negative cash flow on rentals,” said Urbanation president Shaun Hildebrand.
As a result, demand has crumbled and developers have put projects on hold. Urbanation said since the market started slowing in 2022, it has counted five dozen projects have been put on hold indefinitely. That accounts for 21,505 condo units.
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