A recent survey conducted by Rates.ca found that 30 percent of Canadians no longer see condos as a good investment. This survey of 1,568 Canadians also revealed that only 11 percent said they would buy a condo as an investment, while 57 percent stated they would not purchase a condominium for any reason. The softening of investor confidence has led some investors to sell their properties and allocate funds to other investments such as the stock market or high-growth regions like Alberta. High inventory levels have pushed condo prices down, making it easier for buyers to enter the market but posing challenges for sellers due to oversupply. Statistics Canada data shows that two in five condo apartments in five provinces were used as investment properties between 2016 and 2020.
The affordability of condos compared to homes has made them an attractive option for those looking to invest in real estate and become landlords. More than half of occupied dwellings in downtown Toronto and Vancouver are condos, with over half of them rented out. However, the slowing rental market has raised concerns for condo investors, as they face higher costs from property tax and maintenance fees. Rental prices have decreased nationally, making it more difficult for landlords to break even on these increased expenses. The uncertainty caused by factors such as U.S. President Donald Trump’s tariffs has led to a decrease in demand and prices in the housing market, according to the Canadian Real Estate Association.
Despite the declining demand and interest in the condo market, the survey showed that 45 percent of non-homeowners, including younger Canadians planning to buy their first home, are still considering buying a condo. This percentage includes higher-income households earning $100,000 or more who may be looking to enter the housing market. The survey also revealed that 28 percent of Canadians aged 18 to 34 believe that condos are a good investment, as they are often seen as the lowest point of entry into the housing market. Statistics Canada data supports this, showing that a significant percentage of first-time home buyers in British Columbia and Ontario purchased a condo in 2019.
Overall, the survey by Rates.ca indicates a shift in investor confidence towards condos, with a significant number of Canadians no longer viewing them as a good investment. The softening of the condo market has been attributed to factors such as high inventory levels, decreasing rental prices, and economic uncertainties. Despite these challenges, condos remain an appealing option for first-time homebuyers and those looking for a lower entry point into the housing market. It remains to be seen how the condo market will evolve in response to changing economic conditions and investor sentiment in the coming years.
