Real estate remains an investment segment for the bold. The market is ever shifting from an occasional boom to unexpected busts. Surprisingly, the high-end property markets, such as condominiums seem to be doing well.
Surrounding all these factors are the complicated trade, political, and demographic considerations. With the recent drop in condo listings, we are expecting a repeat of 2018 next year. Provided all arising trade issues are quickly solved, we can expect a rapid economic boom that resembles that of the US.
Current Market Situation
The rapid construction of condos has created a supply increase, just the perfect opportunity for investors to reciprocate. Most of the units under construction are owned by investors of whom a significant chunk are financially negative. This means that they are spending way more in maintenance than they get from rental income. A deeper examination of the CIBC report reveals that the rental income barely offsets the mortgage payments – principal, interest, and condo maintenance fees.
Last year, just about half of all condo sales around Toronto were for rental purposes. The income derived from them might not match the costs derived from ownership. Only 48 percent of all buyers were real investors. The larger majority bought the property through mortgages. However, just as I began, the real estate market is not for the light-hearted. Buying and holding onto condos will prove beneficial down the road has given the rapid rise in property prices.
As of last year, the resale price of the condos was 26 percent, while rental income was on a 9 percent rise. Despite failing to meet maintenance costs, investors experienced exceptional returns on their rental income. On average investors who are charging more rent than they pay out in maintenance expenses get a $360 monthly income.
A Safe Bet
In places like GTA, condos accounted for 80 percent of all the home sales within the area. Other investment brokers told economists that their buyers wanted more than rising values. Some of the investors were open to giving out larger down payments so they can get neural cash flows later. Others would use the losses witnessed to limit their total tax burden. Generally, most investors are not affixed to price appreciation but prefer to reside in a Toronto which is viewed as a haven.
Brokers remained confident that the interest rate charges would remain low while the rents charged on the condos keep rising. There is the consensus that there is no expectation of a dire scenario that will force investors to flee the market. Only issues that might bring about trouble are severe recessions or unexpected 200 to 300 spikes in prices that can rattle the most resilient of investors.
Tighter mortgage rules introduced by Ottawa has seen a 33 percent drop in the sales of condos as of the first quarter. Borrowers were subjected to higher costs when trying to gain home ownership. Investors became more cautious after the new rules kicked in. Nevertheless, there remains a good amount of demand in the current market.
Most of the condos are under construction, and factoring them all still cannot meet the demand. For more on why investing in condos is a smart investment decision, look at the best condo units being offered. You can check out their site for more info.