There was a time when the majority of people buying condos were couples seeking to invest in property for themselves as a safe retirement savings option. Condos were $3 per square foot to rent, this was enough for investment success, despite some people claiming these costs were high.
Today, those costs don’t seem as high, with condos renting now from $4.50 to $6 per square foot and their price per square foot for purchasing has nearly doubled – $800 a decade ago, versus $1200 in 2016. These higher rates do not guarantee positive cash flow for retirement-dreaming condo investors, and in many cases, developers have fully admitted that that is not who they are targeting anyways. They expect affluent buyers looking to purchase more than one condo and commit to it for the long haul.
Some experts say that all of those people who purchased condos before and are now not able to make money from their investment, will sell off “en masse,” and afterward the result will be a huge condo oversupply like that experienced by Phoenix.
Others still, say we are headed down the path of Vancouver: residents and empty nesters move from large properties in the suburbs and lap up large condo suites in the city. Read: residents move from GTA to downtown Toronto. The result despite costs being high, the market that is coming can afford them, and as a result, there is a large pre-construction market and condos continue to explode in numbers.
Alternatively, some experts predict Toronto could go the way of New York City. With investors or private equity firms purchase condos with housing, offices, and business all in one, which starts into construction without pre-sale and then relies on the city’s elite to move in.
Only time will tell where Toronto ends up, but for now, condos are still in high demand and selling as fast as they can be built. However fast that is, nobody is really sure.