Real Estate

Residential real estate investors and investment properties in 2020

  • Last Updated:
  • Feb 7th, 2023 2:03 pm
Deal Addict
Feb 19, 2019
2347 posts
4020 upvotes
Stouffville ON

Residential real estate investors and investment properties in 2020

Saw this posted on reddit by Stats Canada, for me who concentrates on GTA it was pretty interesting stat comparison, even though it's from 2020 it probably gives a pretty good picture.

https://www150.statcan.gc.ca/n1/pub/46- ... sing-22-23

Highlights:

The proportion of investors among owners varied from 20.2% in Ontario to 31.5% in Nova Scotia.
Among houses and condominium apartments, just under one in five properties was used as an investment in British Columbia, Manitoba, Ontario, New Brunswick and Nova Scotia combined.
Condominium apartments were used as an investment more often than houses (single-detached houses, semi-detached houses, row houses, and mobile homes). Ontario topped the list with the highest rate of condominium apartments used as an investment, at 41.9%.
Houses used as an investment were mainly owned by individuals living in the same province as the property.


Little surprised to find Ontario has the lowest percentage of investor owned properties. Not surprised to see Ontario investor owned condos at 42%, this matches my experience.
Residential investment properties mainly owned by individuals living in the same province confirms the effect of the foreign investors on the market is a bit of a myth.
Full Time and Full Service Realtor
25 replies
Deal Addict
Mar 25, 2018
1377 posts
2410 upvotes
Wondering what the high percentage of investors would do to the market if rate stays high for an extended period of time.

Back in the 1990's when condo had a possibly even higher percentage of investors (as very few in the middle class considered condo living as a primary housing option), it suffered much worse correction as investors exited on masse, when economy went into a deep recession.

Looking at down town core, it seems like a stalemate now. Given the high transaction cost, those who bought before 2016 run up and who were not highly leveraged can probably afford to hold on regardless what happens. Investors who entered afterwards may be compelled to sell if the high rate is sustained and something happens on the employment front. Not sure about proportion of late entrants among condo investors, maybe 5% overall? Maybe the pre constructions will be the catalyst.
Deal Expert
Feb 22, 2011
16520 posts
21867 upvotes
Toronto
rfduser123 wrote: Wondering what the high percentage of investors would do to the market if rate stays high for an extended period of time.

Back in the 1990's when condo had a possibly even higher percentage of investors (as very few in the middle class considered condo living as a primary housing option), it suffered much worse correction as investors exited on masse, when economy went into a deep recession.

Looking at down town core, it seems like a stalemate now. Given the high transaction cost, those who bought before 2016 run up and who were not highly leveraged can probably afford to hold on regardless what happens. Investors who entered afterwards may be compelled to sell if the high rate is sustained and something happens on the employment front. Not sure about proportion of late entrants among condo investors, maybe 5% overall? Maybe the pre constructions will be the catalyst.
Do you have any data about the 90s? Treb only has from 1996.

From 1996 to 1999 houses went from $200k to $246k an increase of 23% and condos went from $112k to $144k an increase of 29%. I don't have any other data about it though.

What's interesting is in 1996 a condo was 56% of a house and right now it's 48%, fairly similar differential given it's been 27 years. It was actually closer in 2018/2019 at 50-52%. Houses did worse post stress test in 2017 so difference was closer.
Deal Addict
Mar 25, 2018
1377 posts
2410 upvotes
sircheersa wrote: Do you have any data about the 90s? Treb only has from 1996.

From 1996 to 1999 houses went from $200k to $246k an increase of 23% and condos went from $112k to $144k an increase of 29%. I don't have any other data about it though.

What's interesting is in 1996 a condo was 56% of a house and right now it's 48%, fairly similar differential given it's been 27 years. It was actually closer in 2018/2019 at 50-52%. Houses did worse post stress test in 2017 so difference was closer.
Was in the market since 88. You conveniently did not mention what happened between 1987 and 1995. Toronto average condo price did not go back to 1989 peak until 2013, corrected for inflation.
Deal Expert
Feb 22, 2011
16520 posts
21867 upvotes
Toronto
rfduser123 wrote: Was in the market since 88. You conveniently did not mention what happened between 1987 and 1995. Toronto average condo price did not go back to 1989 peak until 2013.
That's why I asked if you had the data. Treb only goes back to 1996. Was more curious for actual numbers than anecdotes.
Deal Addict
Jan 2, 2021
2076 posts
3444 upvotes
I wonder how they track these numbers?

From what I’ve heard many people bought pre-cons and hopped from living in one condo to another every year to bypass HST and capital gains taxes. All of them were officially for personal use. I would suspect real investor numbers to be significantly higher…
Banned
Feb 5, 2023
31 posts
41 upvotes
personal reference:
Bought precon Tridel in Mississauga in june 1988 $130k ,2 bed 1000sq about 20% below market at the time.
Took possession/closed Nov 1990. was offered $165k on day of to sell (didnt).
The recession hits 1991, value drops to about $70k (cant even get offers as NOTHING in GTA is selling ( kind of like now).
sold finally in 1995 for just over 100k.
Conventional mortgage (25% down..no 5% down in that era) netted 3k after everything.

this could be what to come.

As a side...there were many projects that couldn't close, in that era and builders were giving everything from financing to deep discounts as the years went on. ...but this time its different??
Banned
Feb 5, 2023
31 posts
41 upvotes
btw ..the deals that could be had in the mid 90's were unbelievable..if you had the downstroke and could qualify.
Deal Addict
Feb 19, 2019
2347 posts
4020 upvotes
Stouffville ON
TwinkoStar wrote: I wonder how they track these numbers?

From what I’ve heard many people bought pre-cons and hopped from living in one condo to another every year to bypass HST and capital gains taxes. All of them were officially for personal use. I would suspect real investor numbers to be significantly higher…
Given the 42% condo investor ownership in ON as per their stats I think their numbers are in the ball park. I go over many status certificates and assuming these numbers are correct there are many condos in the GTA that have the leased % in the 10/20 - sub 40% range to offset the investor dominated buildings of 80% plus.
Full Time and Full Service Realtor
Deal Addict
User avatar
Apr 30, 2021
3435 posts
4518 upvotes
sircheersa wrote: Do you have any data about the 90s? Treb only has from 1996.

From 1996 to 1999 houses went from $200k to $246k an increase of 23% and condos went from $112k to $144k an increase of 29%. I don't have any other data about it though.

What's interesting is in 1996 a condo was 56% of a house and right now it's 48%, fairly similar differential given it's been 27 years. It was actually closer in 2018/2019 at 50-52%. Houses did worse post stress test in 2017 so difference was closer.
I can send price of any condo pre-1996.

Peak cheapest condo was prob $140k+ so probably average was greater than 50% of detached.

ALSO 1991 they added GST. 50% second mortgage at 0%, the glory days of RE.
69F8F65A-B10F-446B-A3D6-D46322A0A979.jpeg
5A3BF13A-2D73-4A80-A94B-B0F3B3E1BC8F.jpeg
Last edited by LordOfTheManor on Feb 7th, 2023 12:03 pm, edited 2 times in total.
Penalty Box
Mar 27, 2004
10493 posts
9009 upvotes
Toronto
LordOfTheManor wrote: I can send price of any condo pre-1996.

Peak cheapest condo was prob $140k+ so probably average was greater than 50% of detached.

ALSO 1991 they added GST.

69F8F65A-B10F-446B-A3D6-D46322A0A979.jpeg
this guy can pull up articles & video clips anything pre 1996. trust me

pretty sure he has everything on microfiche
Last edited by oasis100 on Feb 7th, 2023 11:47 am, edited 1 time in total.
Full-time Realtor
Penalty Box
Mar 27, 2004
10493 posts
9009 upvotes
Toronto
rfduser123 wrote: Wondering what the high percentage of investors would do to the market if rate stays high for an extended period of time.

Back in the 1990's when condo had a possibly even higher percentage of investors (as very few in the middle class considered condo living as a primary housing option), it suffered much worse correction as investors exited on masse, when economy went into a deep recession.

Looking at down town core, it seems like a stalemate now. Given the high transaction cost, those who bought before 2016 run up and who were not highly leveraged can probably afford to hold on regardless what happens. Investors who entered afterwards may be compelled to sell if the high rate is sustained and something happens on the employment front. Not sure about proportion of late entrants among condo investors, maybe 5% overall? Maybe the pre constructions will be the catalyst.
I would say most condo purchases since 2020, are in big trouble from a cash flow perspective, as they are all closing around the corner. Hence why these assignment sales are now flooding the facebook groups. I would say most between 2016 and 2019 are still fairly safe, if don't' rent out and just sell after closing or on assignment, they should have been very profitable. If you bought precon condo in 2022 and still in 2023, you are living on a prayer hoping you can even get appraised at the purchase price.
Full-time Realtor
Member
Jul 3, 2013
220 posts
391 upvotes
Toronto
Has anyone ever bought / sold an assignment before? When is the balance of payment typically due (the rest of the purchasing of the assignment in excess of your deposit)?

Is it due at the closing of assignment (a month from now) or at the closing of the actual building? (a year away).
Deal Expert
Feb 22, 2011
16520 posts
21867 upvotes
Toronto
oasis100 wrote: I would say most condo purchases since 2020, are in big trouble from a cash flow perspective, as they are all closing around the corner. Hence why these assignment sales are now flooding the facebook groups. I would say most between 2016 and 2019 are still fairly safe, if don't' rent out and just sell after closing or on assignment, they should have been very profitable. If you bought precon condo in 2022 and still in 2023, you are living on a prayer hoping you can even get appraised at the purchase price.
What precon condo sold since 2020 is close to completion? The really screwed people are sfh burb buyers last 12 months. Mulberry just slashed $300k from price and they are closing in months. That's definitely not the worst example people were paying over $1.5m for like Innisfil etc.
Penalty Box
Mar 27, 2004
10493 posts
9009 upvotes
Toronto
sircheersa wrote: What precon condo sold since 2020 is close to completion? The really screwed people are sfh burb buyers last 12 months. Mulberry just slashed $300k from price and they are closing in months. That's definitely not the worst example people were paying over $1.5m for like Innisfil etc.
yes, if you bought SFH in the past 12 months, you are in trouble. If bought SFH in 2020 and early 2021, you are still in a very profitable situation.
Full-time Realtor
Penalty Box
Mar 27, 2004
10493 posts
9009 upvotes
Toronto
blackhat8287 wrote: Has anyone ever bought / sold an assignment before? When is the balance of payment typically due (the rest of the purchasing of the assignment in excess of your deposit)?

Is it due at the closing of assignment (a month from now) or at the closing of the actual building? (a year away).
depends on how the deal is negotiated. Some do balance ( or the profit) at closing especially when the amount is large so that the assignee can do the rest with mortgage.
Full-time Realtor
Member
Jul 3, 2013
220 posts
391 upvotes
Toronto
oasis100 wrote: depends on how the deal is negotiated. Some do balance ( or the profit) at closing especially when the amount is large so that the assignee can do the rest with mortgage.
Thanks for the prompt response.

By "at closing" do you mean assignment closing or building closing? Assignment closing is one month away. Building closing is 1 year away.

Some assignments are sold years in advance and it seems crazy that any assignor would wait 2-3 years before seeing their money (in which case, that almost completely negates the benefit of the assignment).
Deal Expert
Feb 22, 2011
16520 posts
21867 upvotes
Toronto
oasis100 wrote: yes, if you bought SFH in the past 12 months, you are in trouble. If bought SFH in 2020 and early 2021, you are still in a very profitable situation.
Wouldn't most sfh from 2020 and 2021 already have closed?
Deal Addict
User avatar
Apr 30, 2021
3435 posts
4518 upvotes
Another thing to consider is that FREEHOLD TOWNHOMES where not super common pre-1989.

I think when you got freehold townhomes coming out it really started to hurt condo apartments. Builders started FLOODING the market with these cheap townhomes in the 90s. FTHB loved these beauties. Then the flood of these new towns hurt the sale of the similar priced condo townhomes. Why live in apartment when you could live in townhome?

These days apartment is way cheaper than townhome in GTA. Not the same market anymore.

$165k went from 2 bed to end-unit Freehold Town…
276AFEDD-9ADB-4D3D-8F2D-B1E2B5495EC8.jpeg
Images
  • 8A0D7C0A-5B25-46C3-9A8C-EDB0D097CF4C.jpeg
  • 15493C7E-1C20-45E2-B702-6B68B4DDFFCC.jpeg
Last edited by LordOfTheManor on Feb 7th, 2023 12:29 pm, edited 3 times in total.
Deal Expert
Feb 22, 2011
16520 posts
21867 upvotes
Toronto
There were a lot of over priced condo precons in 2022 but they're mostly closing in 2026/2027. They might still be screwed but that's a long time for either things to change or to save up for more down.

Top

Thread Information

There is currently 1 user viewing this thread. (0 members and 1 guest)