Is speculation in Toronto’s condo market surging?

Is speculation in Toronto’s condo market surging?

Is speculation in Toronto’s condo market surging? The number of condos bought on the resale market and then rented out in the Greater Toronto Area surged by 57% in the second quarter of 2017 compared to a year earlier.

Analysis by Urbanation reveals that 622 units were purchased and then rented out through the Toronto Real Estate Board’s MLS system.

Although the firm says it is a relatively small sample size, those transactions made up 8.5% of condo market activity up from 5.2% a year earlier.

Urbanation says that investors were willing to buy condos in the second quarter and take a short-term hit on cashflow believing that capital gains would come later.

“Resale units bought for investment in Q2-2017 were cashflow negative by $238 per month, compared to a net positive monthly cashflow of $46 for investment units bought in Q2-2016,” it reports.

The rise in condo marker speculation is likely to be a spike rather than a longer-term trend though according to Urbanation SVP Shaun Hildebrand.

“Recognizing that the market has changed and condo prices have flattened, and even declined a little, should lead to less short-term speculation in the market,” he says.