While many would-be soothsayers have been predicting the coming crash of the Canadian condo market for a decade or more, hard data is not as readily available. But a couple of recent surveys suggest that the market may remain stable for at least the next few years.
Investment or Home, Sweet Home?
Recently, the Canada Mortgage and Housing Corporation released the results of their survey of more than 40,000 condo owners in Toronto and Vancouver and the most notable finding in these two hot markets is that the vast majority of condo owners call their unit home. The survey found that 82.9 per cent of condos are owned by the people living in them. Additionally, more than half if them (58.4 per cent) expect to continue living in their condo for the next five years or more.
Interestingly, nearly one in five (17.1 per cent) of condo owners own at least one additional unit, which they either rent out or is used by family members.
Crawling along stuck in traffic on Toronto’s Gardiner Expressway gives commuters plenty of time to count all the condo building under construction, reinforcing a view that there are too many units being built.
But, in interview with the Globe and Mail, Shaun Hildebrand, a former CMHC analyst and now senior vice-president with Urbanation, a firm that tracks the Toronto condo market, said that, “I think there is a fear that all of the units currently under construction will be finished at once, flooding the market…. Completions can be expected to average about 20,000 a year over the next three years, which are record levels but aren’t high enough to alone create an over-supply of units.” Hildebrand also points out that with very few rental apartments being built in the city, particularly in desirable areas of the downtown core, young people moving out for the first-time are gravitating to the condos that do come up for rent.
The majority of owners with two or more condos plan holding onto their secondary units for at least the next five years, with slightly more in Toronto (61.3 per cent) then in Vancouver (54.4 per cent) feeling that way. Only 12 per cent said they purchased a secondary condo unit with the intention of trying to sell it for a profit within a year of closing.
Foreign Ownership: A Faux Concern?
One of the boogiemen in the condo market analysis is that overseas buyers are scooping up Toronto’s relatively cheap condos (compared to prices in London, New York, Hong Kong, and other highly expensive cities) and could flood the local market if the global economy tanks.
Yet Urbanation’s survey of condo developers found that the majority feel that foreign-owned condos represent only a small portion of buyers, somewhere between five and nine percent.
Other Survey Findings
The CMHC report also find that 25.7 per cent of buyers purchased their condo in the pre-sale phase of construction.
Also read: Should you buy a condo on concept>
As well, 42.1 per cent of owners had no mortgage on their most-recently purchased condo and 47.1 per cent had made a down payment of at least 20 per cent.
Also read: Financing a pre-construction condo>