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In with the old and out with the new ... condo

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Guest | 08 Aug 2012, 05:04 PM Agree 0

Lending restrictions have left many would-be buyers priced out of new condo market, which, according to property investment analyst Tom Napiontek, spells good news for investors in older condo units.
“As a class with more limited funds,” he says, pointing to the growing number of renters, “the trend is toward more affordable housing, something more likely provided by older condos than these brand-new lifestyle condos that so rapidly multiplied.
“Investors are gobbling up available, older condos at a lower rate and finding a needy market willing to pay the going rental rates.”
As the new mortgage rules restrict buyers by weeding out those who can no longer afford to make a purchase, Napiontek is wagering that older, existing buildings will attract more of those displaced buyers than their new-construction counterparts.
For the investor, those older properties also do a better job of protecting cash flow, given lower acquisition costs.
He suggests seasoned investors consider investing there at a time when Toronto condo sales have slowed by 10% from a year ago.
Much to the relief of Ottawa, there are other signs the federal government’s new, tighter mortgage rules have already slowed the market since their July implementation.
This week, condo developer Urbanation Inc. reported a record high rate of unsold units and slower sales at the end of the second quarter, casting doubt over the timing of new construction.
“We have hit the peak in the new condo market, we are on the down side of the roller coaster,” Executive VP Ben Myers says. “We will really have to see how the developers react to a little bit of the slowing in the market, if they hold off on new launches.”
  • Timothy Brookbanks | 09 Aug 2012, 03:47 PM Agree 0
    It is true that the restrictions make owning a property less attainable for a significant portion of the population. Group buying services, such as Groperty, aid prospective condo buyers in getting a wholesale price seeing as the group of buyers benefit from economies of scale. I think we will see a revival of older low rises and the areas they are located in.
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