17% of condo owners in Toronto, Vancouver bought for investment
More than half of condo investors rent out their secondary unit
Almost one out of five condominium owners in Toronto and Vancouver have bought another unit in order to use as an investment, according to a new Canada Mortgage and Housing Corporation (CMHC) survey.
The 2013 Condominium Owners Survey was released Friday indicating that 17.1 per cent of households surveyed are condominium investors – meaning they own a primary residence and reside in it while also owning at least one other condo unit.
The rest of the survey participants, 82.9 per cent, have purchased a condominium to live in.
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Bob Dugan, the chief economist for the CMHC’s Market Analysis, says the survey provides a peek into two of Canada’s major condominium markets: Toronto and Vancouver. It's the first survey of its kind done by the CMHC.
“While the results are not representative of other markets or all types of investors," Dugan told CBC News. "The intention of the survey is to simply try to fill a data gap ... [it] gives a general insight into the behaviour of the condo market."
A total of 42,426 households were surveyed in August and September of 2013 and all of those people owned their primary residence.
Some of the survey’s findings concerning the owners who are classified as investors:
- About two-thirds of investors who rented out their last purchase had a down payment of 20 per cent or more or did not need a mortgage at the time of purchase.
- 11.9 per cent said they bought their last condominium unit with the intention of reselling it for a profit within a year of purchase.
- More than half rent out their second unit and a third have it occupied by a family member.
- 58.4 per cent expect to keep their last purchased condo unit for more than five years.
The survey doesn’t include Canadian and foreign investors who own units in Toronto and Vancouver but to do not live in either of those cities. Dugan says CMHC hopes to include these investors in the next survey, which is tentatively slated for this fall.
"We have tried to look at foreign ownership over the years," said Dugan. "It's a very difficult group because many of them don't live in Canada full time. We have tried to use land registry data, but that doesn't give you an accurate picture because some of them may hire a property manager or lawyer to report for them."
As far as the current survey is concerned, Dugan said the results show that a low percentage of condos are being rented out and that lines up with the CMHC's fall survey of apartment rentals.
"It's interesting to find out many people seem to want to hold for a longer term on their investment, only 11 per cent of those condo investors want to sell within a year of buying the unit."
Condo sales remain hot in both cities. Recent data from RealNet Canada indicated new condo sales in Toronto went up 94 per cent in June compared to a year before.
Condo sales were 19 per cent higher than the 10-year average but prices were up just 1.5 per cent on the year, a reflection of the abundant supply of new units.