A new report says for the first time ever, more than half of newly-completed condo investors in the Greater Toronto Area were losing money on their rental properties last year — and its authors expect the trend to persist.
The research from the Canadian Imperial Bank of Commerce and real estate research firm Urbanation says 48 per cent of leveraged condo investors who bought pre-construction units to rent out were cash flow positive in 2022.
For the majority of investors, rent generated by newly-completed units was lower than mortgage costs, condo fees and property taxes.
CIBC and Urbanation feel this trend marks a "meaningful shift" that may signal a change in investor behaviour is on its way.
They say they expect the shift toward negative cash flow is expected to worsen in the years ahead as increasingly expensive new condos presold to investors in the past few years reach completion.
They add a reduction in interest rates and further growth in rents will lighten the impact on investors in the years ahead, but won’t be enough to stop their financial situations from getting worse.