Condo investors exit Toronto pre-sales
November 16, 2020
A substantial number of pre-sale condo investors in Toronto are apparently trying to get out of their purchase, as declining rents and stricter lending rules upend the market.
A search of ‘condo assignment’ sales on the online Craigslist listing service in Toronto November 6 showed what is happening: some listings are offering pre-sale units at less than the current selling price. An example is a one-bedroom and den at Concord’s Lakeshore Condo tower in Toronto, offered by a pre-sale buyer at $595,000, or about $70,000 less than the current advertised price for a one-bedroom at the project, which has just completed.
Separate assignment sales sites list more than 150 condo projects in Greater Toronto, including 108 in the City of Toronto, that have condo assignments for sale.
Simeon Papailias, senior partner with REC Canada, told the Globe and Mail recently that assignment sales currently represent around 20 per cent to 25 per cent of his company’s pre-construction sales. Papailias said that this was far higher than the 10 per cent to 15 per cent level seen before the COVID-19 pandemic took hold.
Urbanation said that condo vacancies in the Greater Toronto Area went up to 2.4 per cent in the third quarter 2020. During the same period, the region’s average rental price was 9 per cent lower on an annual basis.
Date from Urbanation, an industry research firm, also showed that approximately 23,000 new condo units will be completed in Toronto by the end of 2020, with another 22,434 expected to follow in 2021. Urbanation estimates that about half of these condos are purchased as rental units.
Condo investors are also facing the fact that, over the past few quarters, banks have tightened mortgage guidelines for single-unit residential rentals, including higher down payments.