More than 80 per cent of new condo investors in the Greater Toronto Area are losing money because their rental income is not enough to cover their mortgage and ownership costs, a new report says. The report, conducted jointly by real estate market research firm Urbanation and CIBC Bank, says while the average monthly cost of ownership has increased to $3,250, the average rent is just $2,700, leaving many investors \u201ccash flow negative.\u201d<\/p>\n
81 per cent of investors who purchased newly completed condos this year are losing an average of $605 per month, up from last year. The surge in housing construction costs has pushed up prices for pre-sale condos, which currently sit at an average of $1,529 per square foot in Toronto.<\/p>\n
By comparison, the average resale price for a condo in Toronto is $746,298. Investors who lack rental income are more likely to sell their units, which will further reduce condo prices. Investors who own multiple units will be hit the hardest.<\/p>\n
A record number of newly completed condos are set to hit the market this year, but high rental prices are putting many out of business. New condos make up 35.5 per cent of the city\u2019s rental inventory, making them a significant player. But there are concerns that new home construction could slow down as investors shy away from pre-sale condos.<\/p>\n
Meanwhile, Urbanation says 76 projects and 24,335 condo units have been delayed in the past year in the Toronto and Hamilton areas.<\/p>\n","protected":false},"excerpt":{"rendered":"