Monday 9 December 2013

Toronto Condo Market at Potential Inflection Point

Toronto condo prices are quite high relative to rents according to Ohad Lederer from Veritas Investment Research.

Selected quotes below:

On the Canadian housing market:

"on any measure real prices, price to income, price to rents, housing in Canada is very expensive, in some cases it's couple of standard deviations of the mean"

"house prices will eventually drop, I don't foresee as US style housing crash, where there is going to be large overshoot"

On the Toronto condo market: 

"it (condo market) may be a catalyst for a broader house market"

"oversupply in the condo market could have a spillover of a second, third order impact into the overall economy if you have too much over investment."

"Amateur landlord’s are rampant in the Toronto condo market"

"anecdotaly, 50-60% of condos under construction are being sold not for owner-occupied but for “investment purposes” - Ohad says there is no accurate numbers to estimate the percentage of investors in the condo market but I disagree. CityPlace neighborhood falls into a very unique census tract were all buildings are condos and 50% of households rent. So there's one number. 

"condo prices are quite high relative to rents"

P.S. Here's Veritas Research report summary on the Toronto rental market: summary by G&B. The report notes that, according to their calculations, condo rents per square foot declined by 1.6%.


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