Losing Money on Your Toronto Condo?
Over the past 10 years, the idea of losing money on Toronto Real Estate was thought to be an impossibility. Prices were increasing at a nice 5-6% per year, and that translated into thousands of dollars per month in ‘paper gains’. Not so any more. If you bought a condo in the past 18 months and you are trying to sell today, there is a high probability that you will lose money on the transaction.
I have been working with a buyer the past few days who is looking for a 2 bedroom condo downtown in the resale market. Our search took to the East Side, then to the West, and eventually we have settled on Cityplace as the buildings and the location is appealing to my client.
Researching some of the properties that are currently on the market quickly reveals that many sellers at Cityplace are currently looking at losing propositions on their investments.Ãƒâ€šÃ‚Â
- A 2 bed+den/2 bath unit is currently on the market for $410,000, original list $429,900. The seller paid $375,000 for the unit in June 2007. The seller spent probably around $15,000 in renovations. This one will sell for around $385,000. Assume closing costs of around $20,000 and these sellers are looking at a $25,000 ‘on paper’ loss.
- Another 2 bed+den/2 bath unit is currently on the market for $360,000. Original list price was $399,900. The seller paid $379,000 for the unit in December 2007. Let’s say the unit sells for $350,000-if so, the seller would be looking at a $29,000 hit + closing costs of roughly $20,000. $50,000 loss in 1 year of ownership. Ouch.
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