Thread by @JohnPasalis

A good look at the challenges facing Toronto’s condo investors. 1/ theglobeandmail.com/real-estate/ar…

“There’s the risk of losing the tenant and the property not selling ... [and] I can’t find you another tenant. We used to have 10-12 units up for lease, now it’s 80 units. I’ll put a unit for sale in one building and [get] not a single showing on some of these properties.” 2/

The risks today’s condo investors are facing are typical recessionary risks –

a decline in demand due to a drop in immigration and higher rates of unemployment

an increase in inventory as younger people move back home because of job loss… 3/

These trends feel “out of nowhere” for condo investors because

a) the recession was caused by a pandemic and

b) they’ve never experienced a recession,

but these risks have been there all along – it doesn’t matter what causes the recession.

Every recession is different 4/

The real test now will be to see how resilient and well capitalized Toronto’s condo investors are.

Can they handle a 20+% decline in rents, units vacant for 3+ months etc. or will they end up being distressed sellers? 5/

Much of this will of course depend on how long this recession and pandemic last, the longer this runs the greater the pressure on condo investors.

And I suspect the end of mortgage deferrals will have a much bigger impact on condo investors vs homeowners/