Condo investors plan to hold their units for the long term, found the Canada Mortgage and Housing Corporation (CMHC) in its third and latest Condominium Owners Report. The recently released report reflects the results of the 2015 Condominium Owners Survey, which looks at the role of local condominium owners and investors in Canada’s two largest condominium markets, Vancouver and Toronto.
The CMHC survey asked 42,681 households in Toronto and Vancouver whether they own a secondary condominium. Of condominium-owning households, 23.5 per cent reported owning at least one secondary condominium in addition to their primary residence. The report focuses on this group of investors, which excludes corporate and foreign investors, as well as secondary unit owners in these markets who live elsewhere in Canada or rent their primary residence.
According to the survey, close to 75 per cent of these investors only have one secondary condominium unit, while 10 per cent have three or more secondary units. Of the investors polled, about 90 per cent said they do not plan to purchase more units in the next year.
The survey found that 49 per cent of investors purchased their last secondary unit to generate rental income, with about 60 per cent of investors expecting to hold their most recently purchased unit for more than five years. Only eight per cent of investors plan to hold their unit for less than two years.
The survey also found that 56 per cent of investors believe the value of their last purchased unit will appreciate, 35 per cent believe the value of their last purchased unit will remain unchanged and about five per cent believe the value of their last purchased unit will depreciate.
When broken down by Census Metropolitan Area (CMA), the survey results show that a larger proportion of investors in Toronto expect the value of their units to increase than in Vancouver. However, the gap between those CMAs is closing as the proportion of Toronto investors that believe their unit’s value will increase has declined since the 2014 survey, while the share of Vancouver investors that believe the value of their unit will increase has gone up.
At the time of the survey, 53 per cent of investors had a mortgage on their most recently purchased unit, which compares with 59 per cent of all homeowners per Statistics Canada’s 2011 National Household Survey, stated the report.
At the time of purchase, about 20 per cent of investors did not require a mortgage, which the report noted is greater than the share of all Canadians (11 per cent) that bought a home last year without a mortgage according to the December 2015 Annual State of the Residential Mortgage Market in Canada by Mortgage Professionals Canada.
About 20 per cent of investors reported making a down payment of less than 20 per cent, and 45 per cent reported making a down payment of 20 per cent or more. Of those investors that obtained a mortgage to purchase their last secondary unit, 53 per cent had a mortgage term of five years, 18 per cent had a mortgage term of more than five years and only five per cent had a term of one year or less.
The latest survey results remained largely consistent with the results of past surveys.
