The Great Toronto Condo Crash Gathers Momentum
The stories of losses on Pre-construction sub 500 sqft Dog Crate Condos & even on slightly larger 600+ sqft units just keep on coming
The same themes but different problems & really bad outcomes
More details are emerging
2/
A new twist is the difficulty in securing normal mortgages to close on these wildly overpriced units
In a great G&M piece this morning #rachelleyounglai describes an 8.3% mortgage rate on a $410K mortgage producing a $4200 payment including mortgage, condo fees & taxes
3/
The Buyers were turned down by their bank and were forced to take a huge mortgage rate
Rent on the unit is $2400 they lose $1800 every month
Or they could sell for a $75K loss, this Pre-Con unit was bought in 2018 & closed last January
A true financial disaster
4/
To make matters worse another Pre-Con unit closed in May & they lose $3050 per month on that one
Absolutely devastating losses that are hard to escape
@JohnPasalis had a great post this weekend
Toronto Pre-Con Condos became wildly miss priced 6 years ago
And no one cared
5/
People just kept on buying with a ridiculously false belief rents would increase massively & mortgage rates would be 2.49% forever
Buyers would snap up Pre-Con Condos at $1250 per sqft when Re-Sale Condos across the street were offered at $825 per sqft
WTF? It made no sense
6/
But here's a common feature: most of them minted money on previous transactions
The couple taking nearly $6K a month losses made a $500K profit on a 2013 unit they sold in 2022
They were Rental Condo Investors who really BELIEVED
Not anymore
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