“The latest CMHC survey release on Condominium Owners in Toronto and Vancouver unfortunately sheds very little light on investors of new condos, who have been driving market activity over the past several years. In fact, when combined with other related data, and performing some residual calculations, the survey results actually show a very large gap in information on condo investors,” Urbanation said in its report published on Tuesday (April 5).
The group said that while the consistent results of the third Condominium Owners Survey demonstrated the quality of the CMHC’s approach, a flaw of the study is that it mainly covers investors who already have owned units for some time now.
“In fact, the results showed only 4.1% of investors surveyed had a unit that was under construction or in pre-sale at the time of the survey. In other words, those looking for information as to who's buying new condos won't find the answers in this survey,” Urbanation stated.
“[Of] the secondary condo owners, i.e. Condominium Owners Survey (COS) investors, 58.7% purchased their last unit five years or more prior to the survey. Furthermore, 57.5% were not purchased as pre-sales, which we know represents the majority of recent condo investor activity, and 87.3% do not anticipate purchasing additional investment units in the next year,” the report said.
Urbanation hastened to add, however, that much remains to be done to paint a more complete picture of the country’s residential real estate sector.
“It may be true that the reason the survey is missing so many investors is because they don't fit the criteria of the survey, meaning the foreign component could very well be larger than estimated,” the group argued. “While these results are still illuminating, from a risk and outlook perspective they offer little insight on current condo market dynamics.”
“It is our understanding that CMHC plans to survey developers for information on foreign buyers of new condos. Urbanation recommends that attempts to augment the COS survey are also made to improve the methodology to gain a clearer understanding of all investors,” the report concluded.
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The most recent survey on Canada’s condominium market conducted by the CMHC did not have sufficient data on investors of new condos, according to an industry observer group.