Toronto’s Growing Problem: Too Many Condo Buyers
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Andrew: Well it’s a theme that we’ve been talking about a lot for the past few months and that is the fact that all these new government rules are forcing people into the condo market and they’re really distorting the whole real estate market by pushing buyers down the ladder, the property ladder. So the stress test rules, rent control, all these little bits and pieces. Rising interest rates, all these things are forcing people to lower and lower price points and what are the lowest price points on the property ladder in the GTA? Condos of course. This article here in Canadian Real Estate magazine is talking about that.
The headline is, “End-users flooding condo market to the detriment of renters.” The new mortgage rules have redirected Toronto’s would be low rise home buyers to the condo market driving up prices and in the process deterring condo investors from purchasing units that renters desperately rely on. Again, this article is basically spot on, it’s quoting a couple of real estate agents talking about what they’re seeing in the market here itself and it’s bang on. Basically people can’t afford houses anymore but they still, it’s like we talk about it before, it’s psychology. It’s human nature. People want to buy something. You say you can’t buy a house. They’re not going to to just not buy anything. People are just going to say, “Well what can I afford to buy? I can afford a townhouse? Okay I’ll buy a townhouse. Okay I can’t afford that townhouse? Okay, I’ll buy a two bedroom condo. Can’t afford the two bedroom condo? I’ll buy a one bedroom condo.” People will buy whatever they can afford.
If you have money sort of burning a hole in your pocket, money that you’ve been saving towards some kind of a home investment, you’re not just going to sit around and wait in most cases. So that’s exactly what we’re seeing and there are consequences to that. So as this article is saying, there’s fewer and fewer rental units available. There’s more and more people competing for the properties that are in the low end of the price spectrum, condos. Both investors and end users. All these new buyers that weren’t there before are now competing for these properties. We also have new renters as well. So the whole market is distorted. People who are just on the cusp of almost being able to afford that starter condo, they can’t anymore. And so now they’re going to keep renting.
Rent control, people are not moving. It’s driving supply down so there’s less turnover in units so rent prices are going up as well. So the whole market is greatly distorted by all of these government measures that have been put in place but again if you’re a strategic investor you understand what these measures are doing to the market and you’re watching things closely. There’s always opportunities to make money. And that’s what we’re here for to help you do and that’s what we talk about every single week on these videos and these podcasts.
If you’d like more information of course you can always reach me [email protected] or call me, 416 371-2333. If you like this video, go ahead and share it, hit the like button, send it to somebody that you know and I’d really appreciate that. Until next time, have a great week.