Toronto condo investors hit by market at ‘recessionary’ level

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The Toronto condo market is deteriorating to “recessionary territory” as the number of investors losing money each month on newly built units surged last year.

Ron Butler, mortgage broker at Butler Mortgage, Bob Dugan, chief economist at Canada Mortgage and Housing Corporation, Lauren Haw, broker of record and industry relations officer at Zoocasa, join BNN Bloomberg to discuss real estate.

About 77% of investors with mortgages on newly built Toronto condos had negative monthly cash flow last year, up from 52% in 2022, according to a report from Canadian Imperial Bank of Commerce and industry consultant Urbanation. That means rents couldn’t cover ownership costs such as mortgage payments, fees and taxes.

The pain has thrust the market into an “economic lockdown” that doesn’t bode well for the housing shortage that’s been deemed a crisis by politicians across Canada. Condo investors play a crucial role in financing new projects, so the financial squeeze may result in fewer new units getting built in the coming years.

With all the stress in the market, Toronto’s condo investors have had less appetite to buy into new projects. Sales of new units — usually agreed to before construction even starts — plunged to the lowest level since the late 1990s, according to the report.

 

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