Investing in a condo is an excellent way to dip your toes into the real estate pool. On top of that, condos also come with all the perks associated with owning a home without having to bear the burden of managing an entire property on your own! Most buildings are managed by Homeowner’s Associations (HOAs), which take care of common areas and security/maintenance expenses. So you can rest easy knowing those tasks are taken off your plate when buying a condo.
When purchasing a condo, you can opt for all the perks of homeowner life with fewer monthly financial obligations.
Compared to single-family homes, condos have long been known for their stability and resilience during economic downturns – a trend that has only become more apparent as time passes.
Before you make a decision, you need to conduct some research. Here are some of the factors that should be taken into consideration:
- What sort of returns can I anticipate from my investment?
- How much time will I have to spend managing this property?
- Will I have enough money set aside for repairs and maintenance?
- How will this affect my ability to buy another property in the future?
Are Condos a Good Investment?
The pandemic altered the Canadian market in various ways, particularly real estate. Although it posed a challenge to businesses, the industry responded quickly and effectively by relying on tech-based solutions such as virtual open houses and e-signatures for transactions.
While some in-person practices have resumed, virtual real estate transactions remain attractive to many and are especially beneficial for those who don’t live nearby or can’t be onsite.
As the business landscape evolves, many investors take this opportunity to scrutinize their investments and search for potential new ventures. With more people now working remotely than ever, many are asking themselves if they should invest in condos – and whether it’s even worth considering as an investment option.
When the pandemic hit, it became evident that some regions of the condo market were particularly vulnerable. Unsurprisingly, big-city condos experienced some of this crisis’s most significant short-term impacts.
For those who seek a lucrative investment opportunity, a down market can present the perfect time for taking on considered risks.
To assist potential investors in making a wise decision, we’re exploring the latest trends in the Canadian condo market:
Condo Sales Canada-Wide
Condos have experienced different levels of cooling in the housing market throughout the nation.
The Toronto condominium market, Canada’s largest, has been notably affected by increased interest rates implemented to reduce pandemic-induced inflation. This led to a dramatic decrease in sales of new condos throughout the city.
RE/MAX Ultimate Realty Inc., Brokerage revealed that sales plummeted a striking 79 percent to only 1,748 units in Q3-2022 – the lowest figures since 2009’s financial crisis. Furthermore, an extraordinary two-thirds of GTA condo projects with available inventory reported zero sales during this period.
In cities such as Toronto, Vancouver and Montreal, condominium listings have skyrocketed recently – a stark contrast to what we have seen over the last few years. On average, new condos are priced at $1,427 during Q3-2022; although this is 1% lower than the previous quarter’s all-time high mark, it remains 15% higher compared to 2021 prices!
Q3-2022 buyers of new condos are presently saddled with a monthly mortgage payment around the $3,300 mark due to high-interest rates; this cruel reality is an eye-watering 58% jump from 2021, when two percent was the benchmark rate.
City living has long been attractive due to the presence of popular markets and amenities, causing many people to be willing to sacrifice space to live close by. This resulted in an explosion of condominiums being built year-over-year at a rate of 40%, with the first half of 2023 expectedly to see record numbers ready for occupancy.
Canadian Condo Prices
The downtown condo market in Toronto is particularly competitive, with noticeable increases in condos available for sale. Because the peak moment of interest and home prices has passed, many unsold apartments have been left empty throughout the city. Consequently, it’s predicted that both rents and property values will decrease as we progress into the coming months.
Even though we are at the end of this pandemic, condominium sales prices still lag behind those of homes and other housing units.
The average price of detached homes in the GTA plummeted by an impressive 13.4%, yet condo prices declined by a marginal 0.9%. As Toronto’s housing market continues to soften and more options become accessible, this trend is likely to continue downward until at least mid-2023.
Why Condos are Still a Good Investment Today?
Despite a weakened condo market, that doesn’t mean it won’t recover. Market watchers predict people will be open to condos for an extended period; the preference for the transition from urban to suburban has been mild.
As immigration restrictions ease and offices, amenities, and other establishments resume normal operations for the foreseeable future, buyers are beginning once more to take advantage of city life’s metropolitan conveniences. Taking up residence in an urban condo is a great way to enjoy all these dynamic cities offer.
Now is the time for investors to take advantage of decreased prices in the condominium market. With robust sales and price activity just before 2020, this sector will likely bounce back soon. Investing in a condo now ensures you’ll be able to reap the rewards when demand returns and condos become more expensive again! Lower condo demands in pricier submarkets mean buyers can purchase units at a lower cost – why not benefit from these significant profits later?
As urban condo demand wanes nationwide and activity in rural and suburban markets declines, several condos enter. This is excellent news for homebuyers who can find great deals on properties that may be ripe with potential as the real estate market rebounds. With wise investments now readily accessible at reasonable prices, savvy investors can capitalize on their purchases as we move forward into more prosperous times.
Contact Chilliwack Real Estate Agents
Contact The Best Homes on Earth Team today for all your real estate needs. We are professional realtors in Chilliwack who will go above and beyond to help you invest in a condo.