Are too many investors buying condos?

The price of oil continues to drag down Canada’s economy and our loonie is teetering at historically low levels, yet Canadians still can’t stop talking about real estate.

So, I thought it only appropriate to dig up some not-so-old real estate facts. How about some statistics on Toronto and Vancouver condos?  The information comes from the August 2014 Canada Mortgage and Housing Corporation study “Toronto/Vancouver Condominium Owner’s Report”—a survey of just under 42,500 condo-households located in Canada’s two largest cities. Here’s 14 of the most-interesting tidbits in the report:

How many condo owners are actually condo investors?

#1. Among the 42,426 Toronto and Vancouver condo-households surveyed (between August and September 2013), 82.9% owned and lived in one condo, while 17.1% owned and lived in one condo and owned at least one additional condo unit.

#2. Of the 17.1% that own investment condos, three-quarters own only one secondary condo unit, while 15.7% own two investment units and 9.8% own three or more investment condos in either Toronto or Vancouver.

How long will they keep the investment condos?

#3. Of those that did purchase an investment condo, 58.4% expected to keep this investment suite for five years or more, while 11.9% said they planned to sell within a year of purchase.

#4.The largest share of condo investors (46.3%) purchased their last unit six or more years prior to August 2013. Just over 16% purchased their investment unit in 2008 or 2009, while 33.1% purchased their last investment unit in 2010 or later.

How many investment condos are rented out?

#5. About half (or 51.2%) of the 17.1% of those condo investors rent out their investment unit. Roughly a third (36.8%) let family occupy the secondary condo purchase. Only a small percentage (6.9%) left their investment condos vacant.

How many of these condo investors carry mortgages?

#6. Just under half (42.1%) of Toronto and Vancouver condo owners surveyed did not have a mortgage on their last condo purchase.

#7. Among those condo investors that did hold a mortgage, 27.2% opted for a mortgage amortized for less than 25 years; 39.8% chose an amortization of 25 years, while only 13.1% selected a mortgage with an amortization that was greater than 25 years.

How much down payment did these condo investors put down?

#8. 47.1% of condo investors made a down payment of more than 20%, while 20.5% put down less than 20% at the time of purchase.

#9. The survey showed that 17.5% didn’t need to make a down payment, as they didn’t carry a mortgage on the investment condo.

What appreciation expectations do these condo owners have?

#10. Almost half (47.9%) of condo investors expected the value of their unit to increase in the next year (August 2013 to August 2014). However, 42.2% expected the condo value to remain the same, while 5.4% expected their condo investment to depreciate.

Some interesting additional facts…

#11. More than two-thirds (88.1%) of the condo owners did not plan on purchasing additional condo units in 2013 and 2014.

#12. Only 2.8% of those investors surveyed said their investment unit was either in pre-construction or construction phase.

#13. Just over 25% of condo investors surveyed purchased their investment condo in the pre-sale phase of a project (i.e. before the start of construction phase).

#14. The CMHC survey did not include investors that buy and hold using corporations. Nor did it include domestic or foreign investors that own a Toronto or Vancouver condo but do not reside in either municipality.
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