Recent Study Finds That Large Share of Condos are Investor-Owned
Posted By: Rachel Kavanagh
Recent Study Finds That Large Share of Condos are Investor-Owned – With the real estate market healthy, condos are becoming the ever-popular choice for buyers and renters alike. However, what type of individual owns these units?
A recent study found that more than one-third of Toronto’s condo market is owned by people who do not live in the units but prefer to rent them out, use them as secondary residences, or even leave them empty.
The data released by Statistics Canada as part of the federal governments new Canadian Housing Statistics Program (CHSP) indicated that the situation in Toronto is not as drastic as Vancouver’s condo market. In Vancouver, about half of all condo units in the city are investor-owned.
Andy Yan, director of the Simon Fraser University City Program, analyzed the data set for the top five most populated municipalities in the GTA for 2018.
Markham had the highest rate of non-owner occupied condos at 38.7%, followed by Toronto, Mississauga, Richmond Hill, Brampton and Vaughan.
John Pasalis, president of Toronto’s Realosophy Realty Brokerage has found that Toronto condo prices rose significantly since the federal government introduced the new mortgage “stress test” rules in 2016. The reason was first-time homebuyers were shut out of the detached house market, so they turned to the condo market. The added interest drove prices upwards.
Once the new stress test rules were implemented during 2016, the price for a condo was $429,407. By April 2018 the price had risen to $559,343 – an increase of 30.25%.
CHSP gathered its data by looking at administrative information, including Canada Revenue Agency, land titles and property assessments, to answer questions about homeownership, rental housing and other key factors.
The data has collected the number of investor-owned condos that are operating as rentals, the source countries of the investors, the patterns of investor ownership by neighbourhood and the age of the buildings preferred by investors.
In the past, the agency would rely on household surveys to collect housing data, but surveys don’t work when homeowners are non-residents. That is why it requires a new strategy. StatsCan has agreements with the provinces and territories to access hospital data and determine if a person was born in Canada, proving their residency.
It is important to understand that the idea of investors owning condos is not a bad one, as long as purpose-built rental buildings are accompanying them. Often investor-owned rentals sit empty and unused and this can have a direct impact on local housing.
Virtually all of the rental stock built in the GTA over the past 15 years has come from condominiums versus purpose-built rentals. Many of those condos that are currently being used as rentals are now being sold to end-users, shrinking the pool of rental units.
In cities where housing affordability is a concern watching the types of buildings being constructed and who is purchasing the units will provide important details as to where the market will be headed.
* Recent Study Finds That Large Share of Condos are Investor-Owned – written by Benczik Team Realty
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