Condo investors are trying to tear up purchase contracts as rental prices drop

680 business editor, Mike Eppel, has all the details.

By Mike Eppel

There are more signs of cracks in the condominium market.

Condo builders are seeing an increasing number of investors trying to tear up their purchase contracts.

With rental prices for condos down 10 months in a row, the financial metrics may no longer work for some buyers on new projects who bought with little money down.

Despite record-low borrowing costs, some purchasers on new projects have been looking to offload their properties — selling the right to buy a new condo in a practice called ‘assignment sales.’

RELATED: Toronto rental rates continue to get less expensive for seventh month straight

Realtors who broker pre-construction sales told the Globe and Mail there has been a wave of assignment listings, with a glut of newly built properties, and the number of vacant units, specifically in the 416, surging to levels not seen in years.

Industry research group Urbanation has calculated the vacancy rate at the highest in over a decade with average rental prices down nearly 10 per cent since the start of the pandemic.

The Globe and Mail reports demand for rentals has dropped with border restrictions and no tourism leading to less demand for Airbnbs.

A record breaking 23,000 new condo units will be completed in the Toronto region this year, and another 22,434 are due next year.

Urbanation estimates that 50 per cent have been bought as rental units.

Top Stories

Top Stories

Most Watched Today