October 2015
Investor owned condos distort the market.
Investors can increase the value of property without residing in the area. They can create a situation where those working in an area are unable to live in it.
Some groups are attempting to determine how much of the condo market is investor owned.
According to Canada Mortgage and Housing Corporation (CMHC) 17.1% of condo owners in Toronto and Vancouver are investors.
Susan Pigg, in a Toronto Star article, reports that foreign investor owned condos represent “at least 40%” of the market. She points out that the CMHC survey upon which their estimate is based excludes foreign investors as well as those who do not live in Toronto or Vancouver. It also excludes condos purchased in the last five to seven years where construction has not yet begun or is incomplete.
CondoNow, an online marketplace for new condos, reports that investors represent 50% to 60% of all sales.
Investor owned condos where nobody resides is a benefit to the city. These people pay taxes and do not consume services. When investor owned condos are rented by others, they tend to decrease the quality and value of a condo building to prospective buyers.
Take the example of Absolute Condos in Mississauga, also known as the Marilyn Monroe Condos for their curves. When built, many were sold to investors and speculators. Owners then rented the units to tenants. This resulted in a loss of value in the units and an increased length of time to sell them as compared to neighbouring buildings. More than half of these buildings are now being rented out. Reported problems include drug use, prostitution and excessive noise.
