Report Finds Large Majority of Greater Toronto New Condo Investors Facing Monthly Losses

July 25, 2024 TruthUSA

A recent report reveals that Canada’s largest condo market is currently facing its most significant challenge in decades, with a growing number of investors experiencing monthly financial losses exceeding previous levels.

The report, conducted by CIBC and Urbanation, indicates that due to increasing expenses, 82% of new condo investors found themselves cash flow negative in the first half of this year, a sharp increase from the 52% recorded in 2022.

Specific data from the report shows that new condo investors in 2023 experienced a monthly cash flow deficit of $597, compared to $223 in 2022. This marks a stark contrast to 2021 and 2020 when investors were generally making monthly profits.

The report attributes these financial challenges to higher interest rates and the completion of higher-priced condos, which caused ownership costs to rise by 21% last year, significantly outpacing the 8% increase in rents.

Authors Benjamin Tal and Shaun Hildebrand warn that this financial landscape is leading to a slowdown in condo sales and completions, which could result in a housing stock stagnation in the upcoming years.

They predict that the Canadian housing market, especially the Greater Toronto area, is currently undergoing its most significant test since the recession of 1991.