The number of condos bought on the resale market and then rented out in the Greater Toronto Area surged by 57% in the second quarter of 2017 compared to a year earlier.
Analysis by Urbanation reveals that 622 units were purchased and then rented out through the Toronto Real Estate Board’s MLS system.
Although the firm says it is a relatively small sample size, those transactions made up 8.5% of condo market activity up from 5.2% a year earlier.
Urbanation says that investors were willing to buy condos in the second quarter and take a short-term hit on cashflow believing that capital gains would come later.
“Resale units bought for investment in Q2-2017 were cashflow negative by $238 per month, compared to a net positive monthly cashflow of $46 for investment units bought in Q2-2016,” it reports.
The rise in condo marker speculation is likely to be a spike rather than a longer-term trend though according to Urbanation SVP Shaun Hildebrand.
“Recognizing that the market has changed and condo prices have flattened, and even declined a little, should lead to less short-term speculation in the market,” he says.
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