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Emboldened By Their Returns, Investors Bought More Units, Now They’re Flooding The Market

A report from Insauga in Canada. “With more condos being listed and prices dipping month-over-month, should condo owners in Mississauga be worried? ‘Condos are selling for under-asking, but the overinflated market we had is correcting so we can have stability over the long term,’ said Nik Oberoi, a Mississauga-based sales representative with Cloud Realty. ‘This isn’t the exponential growth we’ve been seeing. I’m relatively happy to see this because an 800 square foot condo shouldn’t be selling for the same amount as a three-bedroom townhouse. This is bringing condos back to what fair market value should be.'”

“‘The number of new listings continues to go up, and the number of sales continues to go down,’ says Oberoi, adding that the decline in condo sales also has a lot to do with former Airbnb units hitting the market. Oberoi says the condo market, particularly in Toronto, has taken a more pronounced hit and that people never prepared for any price correction in the GTA market.”

“‘It’s inevitable,’ he says. ‘People have been oblivious to the risks involved in real estate. There’s a misconception of what return on investment they’ll get because of the past few years. If you are going to enjoy the perks of the extremely high market, you have to accept this part of the investment.'”

“Kim Kubath, a broker with Keller Williams Realty, agrees that a correction in condo units is inevitable. ‘I don’t think [the condo market] will crash, but I do think there will be a correction due to the increased inventory in the rental market and [influx of] Airbnb units. Those investors may not be able to afford to carry their units long-term and will likely sell,’ she says. ‘As people move out of the city due to COVID or working from home, more condos will hit the market, and more supply and less demand will cause a correction in prices.'”

From Toronto Storeys. “Average rents in urban centres continue to decline in major cities across the country, including here in Toronto. According to Rentals.ca’s and Bullpen Research & Consulting’s latest National Rent Report, which compares rents in 35 Canadian cities, rents for one- and two-bedroom apartments and condominium rentals continue their downward trend year over year, while the average rent for all Canadian properties has remained the same the last four months. The September average monthly rate is down 9.5% annually.”

“What’s more, in Toronto, single-family rental rates are also down, falling 20% year-over-year in the third quarter, while condo rents are down 16% annually. ‘Toronto is seeing the biggest decline in rental and condo apartment rental rates on average among major municipalities in Canada; this is driven by the rapid decline in downtown condo rents, with many recently completed buildings seeing rates drop by 10% to 15% annually,’ said Ben Myers, president of Bullpen Research & Consulting. ‘Several of the condos experienced listings growth of 100% to 200% annually — a textbook example of what happens with less demand and more supply.'”

From Blog TO. “A global pandemic may be all it took to pop one historically-lucrative segment of Toronto’s housing bubble… or at least deflate it slightly. Condominium apartment prices appear to be falling in the City of Toronto at a consistent rate for the first time in years. Dr_Silberschmelzer: ‘The #condo market is mass. Active listings are running 200% above last year’s levels. As a result, average prices are dropping about $10,000 per month with #rents tumbling even faster.'”

The Financial Post. “For four months, Christopher Bibby anguished over how to sell a 435-square-foot condo in Toronto’s entertainment district. The unit, which was listed in March at $569,999, wasn’t visited once in its first two months on the market. There were no calls and no emails. ‘Those were dead months,’ he said.”

“Bibby already thought he was giving buyers a bit of a break. He had sold a condo of the same size, with the same floor plan and in the same building for $580,000 in February. But that was before COVID-19 upended Toronto’s condo market. After two months, Bibby trimmed the price even further to $529,999 and, coupled with loosening lockdown restrictions, that generated enough interest to do a showing every 10 days. Still, there were no offers.”

“It wasn’t until mid-June that Bibby and the unit’s owner were able to finally fill the unit — after putting it up for rent at a below-market rate. Bibby’s experience is representative of a wider trend in Toronto, where it appears that these smaller units are weighing down the entire market.”

“Pre-COVID-19, these condos were the hottest on the market. Investors flocked to them because they were the only form of housing under $500,000 available in Toronto and the high rents they could charge on these units meant that making profit was close to a sure thing. Most of them were snatched up on the pre-construction market and as investors became more emboldened by their returns, they bought more units, said Shaun Hildebrand, president of Urbanation.”

“Now they’re the ones flooding the market with listings. In September, new listings for micro units were up 165 per cent year over year. Frank Polsinello, a broker of record at RE/MAX, has seen this sentiment play out in the digital ads he places on Facebook for micro condos. In the past, the comments would be lined with interested people tagging agents to see the property. Now, they’ve turned negative. ‘What we’ve been seeing a lot is: ‘Why would I pay $600,000 for that 453-sq.-ft. closet?'”

“‘We’ve had a few that we have taken off the market recently because there’s a glut,’ Polsinello said. ‘We’re constantly monitoring the inventory. If we see there are six, eight, 10, 12 of these things that are all identical, (buyers) have the pick of the litter and it’s going to keep driving the price down.'”

“Vanessa Jeffrey, the broker of record at RE/MAX’s Property Shop, said she recently secured a 475-sq.-ft. condo in downtown Toronto for a client with a $450,000 bully offer when similar units had recently sold for $510,000. Not only was their bid price accepted, but the owner agreed to her client’s conditions as well. ‘We knew they weren’t getting showings,’ Jeffrey said.”

The MTL Blog. “Rents are falling in the country’s three largest cities, according to a recent report from PadMapper, an apartment rental and lifestyle website. The biggest drops were in Toronto and Vancouver but rents also fell in Montreal, though it’s always been cheaper to live here anyway. In our city, median one and two-bedroom rents were down 6.7% and 2.8%, to $1,400 and $1,750, respectively, since the same time last year, the September report says.”

“Toronto and Vancouver, the two most expensive places in Canada, experienced ‘record dips in prices’ — 14% in the case of a two-bedroom apartment in Vancouver, states the report.”

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This Post Has 86 Comments

  1. average prices are dropping about $10,000 per month with #rents tumbling even faster…There were no calls and no emails. ‘Those were dead months’

    I don’t know Chris, you’re taking a 10,000 Canadian Peso a$$-ounding for each of those months. Seems kinda entertaining to me.

  2. ‘in Toronto, single-family rental rates are also down, falling 20% year-over-year in the third quarter’

    Oh dear…

    1. ‘in Toronto, single-family rental rates are also down, falling 20% year-over-year in the third quarter’

      I keep seeing the same rentals posted on Craigslist at fantasy prices with no takers. It’s like the last bust where people were putting their houses up for sale for the amount owed, which nobody would even think of paying. The foreclosures are going to be epic.

      1. “It’s like the last bust where people were putting their houses up for sale for the amount owed”

        as i recall thats when “short-selling” started. if that didnt work out they moved those shacks to the “foreclosure” pile.

  3. I don’t think [the condo market] will crash

    (drill sergeant voice) That’s right…you don’t think!

    1. My daughter just told me there is a two bedroom condo for sale on a street near mine for $1.5 million.

      And here it is.

      https://www.zillow.com/homedetails/543-16th-St-APT-3F-Brooklyn-NY-11215/79709901_zpid/

      Just perfect for a couple making $50,000 per year each, or perhaps a little more. Except for the price part.

      And its a small building. What happens when one of the other owners stops paying their share of the common charges? Currently $427 per month, but possibly going up as the tax breaks NYC has for new development expire.

      1. yes i always wondered about the 421a 10-20 year tax breaks…. they should be expiring soon …i guess a million is for the wrap around outdoor space.

        1. Looking at the floor plans, I’m pretty sure that the wraparound roof deck is communal, not private outdoor space. The only private outdoor space is the teeny balcony.

      2. That’s one of those old places that smells funny (not ha ha funny) no matter how many times it’s renovated.

    2. I’ve been on the NYC subway a few times, but I’ve only seen the subway parts of the subway, so to speak. Is this complex inside the fare gates? It looks like the mall inside a large airport. And who is dumb enough to put out a display case of open merchandise like that? Talk about grab and go!

      1. If you look at the lines that stop there that can only be one location: 59th Street, Columbus Circle.

  6. Dumb questions of the day:

    1) Will the globalist central banking cartel eventually step up to reverse the massive international cratering of real estate currently underway?

    2) If so, will hair-of-the-dog bubble reflation work one more time, or is this the big one?

    2. 1) They will rescue their buddies only, all others will be advised to pound sand.

      2) This is not The Big One, this is The Great Reset.

      1. AFAICT the “Big One” is when all the banks and ATMs are closed, the power is off, the internet is down, cell phones stop working and there is nothing being broadcast on commercial radio or TV.

        1. The prepper community is again advising that everyone have on hand non-perishable food and water, a backup source of electric power, and bug-out options. They are anticipating that riots may disrupt the power/water infrastructure. You would think they even rioters would know better than to destroy electricity that they themselves need, but then, these are the guys that combat ism by pulling down statues of Lincoln and Grant, so anything is possible.

          1. The prepper community is again advising

            50+ years ago I was part of an organization who’s motto was “Be Prepared”. The mindset was more about life skills than it was about going out to buy bottled water and generators. There is an advantage in always being prepared vs. buying things on cue that will run out.

          2. Just reminds me of katrina, the local rednecks were looting gas grills from walmart and food to cook for people while the 9th ward peeps were looting big screen tvs game boxes when there would be no electricity for 6 months.

          3. I think you’re giving them way too much credit. It took the ones in Portland months to pull down some statues.

        2. AFAICT the “Big One” is when

          Wouldn’t that be a good time for a foreign power to invade the US?

  8. “Toronto and Vancouver, the two most expensive places in Canada, experienced ‘record dips in prices’ — 14% in the case of a two-bedroom apartment in Vancouver, states the report.”

    Is that a lot?

    1. Not really. When I bought in 2012, the house was priced at nearly 40% off the Zestimate. Granted, IMO the zestimate was ridiculously high. There’s still some room at the bottom.

  9. The globalist pearl-clutching is going into high gear, as the so-called Red Pill Expo brings together enemies of globalism at Jekyll Island – birthplace of the criminal private banking cartel known as the Federal Reserve that has been shafting the 99% since 1913.

    https://www.theguardian.com/world/2020/oct/14/armed-militias-conspiracy-theorists-anti-vaxxers-red-pill-expo

    Leading advocates of anti-government and anti-science propaganda came together at the weekend, joined by the founder of one of the largest militia groups. The rare connection occurred at the Red Pill Expo, a conference convened on Jekyll Island, Georgia – a symbolic location as it is the birthplace of the US Federal Reserve, a popular bogey figure for conspiracy theorists.

    1. “The summit, staged indoors in front of a packed and maskless audience of about 350, was headlined by Stewart Rhodes, president of the Oath Keepers. The militia, which turned up menacingly at several Black Lives Matter (BLM) protests over the summer and has acted as a vigilante squad at numerous Donald Trump campaign rallies, has links to 25,000 current or past members, mostly military or police veterans.”

      Oh the horror!!! 350 maskless x/infinity people will now be infected with the rona! think thats about 1 gazillion 50 people. bring out yer death carts sheeple!

      1. Rhodes’ appearance marked an unusually overt fusion of interests between armed far-right groups and anti-government and anti-pharmaceutical conspiracy theorists. Several of his fellow keynote speakers denounced the coronavirus pandemic as a fraud cooked up by global elites as a ploy to subjugate the American people.

        Oh dear. The former sheeple who have become awake and aware are seeing through the lies and propaganda they’re being fed by The System. It’s also not a “conspiracy theory” that the globalist elites have enriched themselves to the tune of $845 billion during the scamdemic, while 50 percent of small businesses in the U.S. alone have been culled.

        1. https://www.dw.com/en/worlds-billionaires-get-even-richer-during-the-coronavirus-pandemic/a-55182129

          The combined wealth of the world’s super-rich reached a new peak during the coronavirus pandemic, according to a study published by the consulting firm PwC and the Swiss bank UBC on Wednesday.

          The more than 2,000 billionaires around the world managed to amass fortunes totaling around $10.2 trillion (€8.69 trillion) by July, surpassing the previous record of $8.9 trillion reached in 2017.
          Read more: The next US president: Wall Street’s fear of the left
          The number of people with assets valuing $1 billion or more increased from 2,158 in 2017 to 2,189 in July 2020.

    2. Jekyll Island

      It looked like there is a nice RV park there when I was supposed to drive by a few weeks ago. I wanted to stop but ended up going to a friend’s lake north of Atlanta and accidentally swimming instead before heading west.

    1. Right Mr Banker. I don’t even need to see your tape to know that Monopolies took over our Government.
      What is worse is that they are One World Order Globalist with a agenda of top down control of the World. They own the media and how dare Trump and his voters push back on this hijacking of the USA in favor of a system that becomes rigged markets and monopoly control on pricing.
      This system that hijacked the USA is a throwback to the Guilted Age when a Group of Fat Cats in the 1850’s controlled all industry by Monopolies, where workers got slave wages . Globalist monopoly to manufacture in the cheapest wage Nation like China is no different as it destroys all completion as the rich get richer.
      Obamacare was a Monopoly on pricing with forced compliance by the IRS to charge based on income, not on health risk. Gouging monopoly prices were the net result. Rigged financial market is the hallmark of monopolies and it isn’t capitalism.
      Commies have taken over the educational system and along with fake news narratives of racism and America is bad, this force has conspired with the monopolies to turn the USA into a Commie shit hole with Top down control by the Fat Cat Globalist. .
      Only choice is for the people to take back the government from these sinister forces that would destroy the USA.
      Now I’m going to look at the tape you posted Me Banker.

      1. “We’d see something we liked and look back a day later and it would be under contract,” said Rich G., a 37-year-old lawyer who relocated with his girlfriend from “hectic” Toms River, New Jersey, to Aroostook County.

        The couple paid $159,000 for a three-bedroom ranch in Caribou, in the northeast corner of the state near the Canadian border. But they had to move fast.

        “We made an offer within a day or two because we really liked the house,” said Rich, who asked not to publish his surname. “We acted quickly because we knew what was happening in the market.”

        Pretty sure there is a bubble now. Caribou and Aroostook County are next to the Canadian border. Picture a 3 hour ride to get to Bangor, ME, the nearest major city in Maine. And I bet that house they bought for 159K was probably 50K a few years ago too.

          1. Rings and papers you stupid woman. Rings and papers.

            This gives me chills. Why in the world would a man do this?

          3. Let them try and start the car in an unheated garage at 20+ below zeeerow and they are out of food and toilet paper. and no one to deliver.

    2. Maine is 20 percent second homes, the most of any state.

      But they are all owned by people from metro Boston, not New York.

      Maybe people are just going home. Lots of young people from Maine come to NY for office-based jobs.

    3. Acquaintance of mine was approved for $340,000 mortgage limit here. I don’t think she is putting a down deposit down either and I don’t think she makes anything near $100,000 to come within the 3x income rule of thumb ( she is a single parent too).

    1. Years Later, Predatory Loans Continue To Burden Many Black Homeowners In Prince George’s County

      ‘Now, some local homeowners continue to grapple with the effects of predatory loans, which started off as low payments and then grew exponentially. They fear the pandemic and the current economy will only worsen their situation.’

      ‘Could Prince George’s County be facing another housing crisis?’

      https://wamu.org/story/20/10/14/years-later-predatory-loans-continue-to-burden-many-black-homeowners-in-prince-georges-county/

        1. when i was doing paralegal stuff it seemed like the white people would really read the documents and ask questions at the closing and the others took the word of the bank and re agent.

        2. “Are there any documented cases on record of “predatory” lending to white people?”

          No.

          All black people who are lucky enough to escape the racist police are tracked down and forced to sign predatory loan documents.

  14. ‘VISALIA – The county board of supervisors’ largest gripe against the governor hasn’t necessarily been his plan to reopen the economy—although they’ve had problems with Newsom’s approach—it’s been that the metrics to reopen keep changing. And last week the board took official action to let the governor know how they feel.’

    “Essentially, stop moving the goal posts,” County Administrative Officer Jason Britt said.’

    https://thesungazette.com/article/news/2020/10/14/board-to-governor-stop-moving-metrics/

    Must, drag out, past election…

    1. “California artificially increased Tulare County’s case rate from 11.4 per 100,000 people to 11.7 because it had told asymptomatic residents not to get tested when supplies were scarce.”

      This entire covid thing is just plain stupid.

    2. Must, drag out, past election…

      And yet get stimulus funds from the federal government to shore up state finances.

      1. That money is borrowed, not grants. Be looking for property taxes to be increased after a special line item bond tax is approved by the legislature.

        1. Be looking for property taxes to be increased after a special line item bond tax is approved by the legislature.

          This kind of reminds me of a line item on my old water bill for a house I used to own. There was like an $8 extra monthly charge for a special item of sorts. You see, they got a bunch of bids from contractors to do somewhere north of $50 million in repairs to the treatment plant, and they awarded the bid to a scammer who took something like $3 million up front and left the country. Nobody got fired, of course.

  15. ‘Aston Barclay has reported that the “unstoppable” strength of the used car market might be about to soften after increased post-September supplies start to reach remarketing centres.’

    ‘Reporting a fall in dealer prices during Q3, alongside a softening of all used car values in the first two weeks of October, the independent remarketing specialist believes the sector may be seeing the first signs that Q4 will see the market returning back to “some normality” with prices and demand stabilising and supply continuing to gradually rise.’

    ‘Managing director, Martin Potter, said: “The market for used cars between 12 and 60 months old was unstoppable in Q3 which is why late and low and fleet prices were so high, but we have witnessed a change in buyer attitudes in early October.’

    “Many buyers have started to only buy the stock they need for fear of market prices moving downwards and them being left with a number of cars owing them money.”

    ‘Meanwhile, dealer part exchanges beyond 60 months of age sold saw values fall across all sectors in Q3 by an average of 8.8%, after what it described as “the extraordinary” rises, of up to 20%, experienced as the market emerged from COVID-19 lockdown in Q2.’

    ‘The report added: “Supply improved dramatically in the old and budget part exchange sectors, while supply of younger part exchanges at between 55-to-78 months old reduced as dealers chose to hold onto their stock to retail rather than send them to auction.”

    ‘Aston Barclay warned that a number of unknowns could define the used car market in Q4. The end of Government Coronavirus Job Retention Scheme (CJRS), repossessions and voluntary terminations flooding into the market and ultimately the impact of Brexit are all likely to impact consumer and dealer confidence, it said.’

    ‘Potter added: “Any one of these could affect dealer and consumer confidence. However, we feel prices will remain healthy into 2021 as new car lead times keep extending. This means a flood of used cars hitting the market will be avoided as ex-business and personal leasing contracts are extended due to new car delays.”

    https://www.am-online.com/news/used-cars/2020/10/15/price-drop-fears-may-end-used-car-values-unstoppable-strength

    1. What kind of fool would believe this could go on forever? They can continue building cars until the lots have no room.

      1. The fools are driving nice stuff with the new car smell, blue tooth head units, etc., while the responsible are coping with high-mileage, run-down junk. When it finally blows-up, we’re all in this together.

          1. That’s exactly how it was at my last job servicing government clients; the lowest paid employees were all driving the newest vehicles. Their managers acknowledged it, but wouldn’t discuss it; looking back, it was CYA all the way.

    2. Convenient excuse to avoid the press with the deluge of information regarding the Bidens’ corruption.

  21. The Narrative is that a full Lockdown is better for the economy:

    https://www.cnn.com/2020/10/15/business/lockdown-economy-johnson-uk-intl/index.html

    Governments across Europe are choosing between two vastly different strategies as a second wave of Covid-19 arrives in force. Most are imposing limited local restrictions and keeping their economies open. But in the UK and Ireland, scientific advisers have pushed for second national lockdowns, despite fears of an economic shock.

    The crisis, which hit Europe for the first time in early spring, is back — but this time around, many people feel that locking down society is too high a price to pay. Yet most medical and economic experts CNN spoke to agree that, in the long run, a short lockdown is better than a constant battle to contain the pandemic.

    1. Full lockdown or no lockdown would have been better for the economy.

      Full lockdown would have us where New Zealand is, with essentially no cases, and ready to open back up, with international travel shut down. No lockdown could have been effective too, if people would wear masks, but we’ve seen how that went.

      Our lockdown-not lockdown-lockdown-not lockdown, lie about it all, and blame each other is the worst of all the possible strategies…. except for maybe pretending there is no virus and just letting ‘er rip. That’d work well at first, but once the hospitals tipped over people would be hiding out and business would tater anyhow.

      There just doesn’t seem to be a solution where everything is ok and we all get a pony.

      1. Full lockdown would have us where New Zealand is

        Sure. Except NZ never had anything resembling a full lockdown.

    2. Give us a 15-minute test and a pack of Ivermectin/doxycycline pills at point of positive test, and we can open up fully. But that would make Trump look good and p.o. Big Pharma, so it will never happen. *sigh* SOOOOO frustrating…

    1. The map in the article is suspect. It shows that Colorado had no revenue loss, yet the state had to reduce the budget from $33B to $30B.

      https://coloradosun.com/2020/06/18/colorado-state-budget-cut-coronavirus-jared-polis/

      In the final hours of the lawmaking session, the General Assembly finalized a $30.3 billion state budget after weeks of difficult work to close a $3 billion deficit. Instead of expressing relief at the finish line, the top legislative budget writer issued a warning.

      “For those of you who haven’t heard the news flash, next year is going to be worse,” said state Rep. Daneya Esgar, the chairwoman of the Joint Budget Committee.

    2. “I know we have a fiscal crisis in New York, but I was not aware that the decrease in state tax revenue in Florida and Texas was even greater.”

      The dude who taught the construction business law course I took for my contractors exam told us not to cuss at snow birds and tourists for their poor driving habits and overcrowding of restaurants etc. in the winter, for if it weren’t for them we would have a state income tax.

      You close down the Orlando attractions and the beaches and Florida has a big revenue problem.

  24. When you have Globalist monopoly fake news controlling the narrative, along with the suppression of real news, it shows what forces captured our Government.
    The Fat Cat Globalist Monopolies that create all the damage want the Gov to pay for all the damage they cause by their looting.
    It’s all about the Gov paying for Commie programs so the Big Globalist Fat Cats can maintain their monopoly control of rigged markets, while the Gov pays for their damage by Commie programs.
    So, this non stop attempt to take Trump out by the powers that already hijacked the Gov. The Resistance that have shown their true Colors in the last 4 years , is evil.
    So, open borders, Commie health care monopoly, pay for illegals, take the guns, Commie programs to pay for the damage Monopolies do, no school choice,free speech destroyed fake racism and Climate Change narratives, attack on whites and rewrite American history to erase the Soul of America .

    Only under this Political sell out by Washington DC, that started about 25 years ago, can you get the Commies and the Globalist Fat Cats working together for the takeover of the USA.
    How do you like Big Gov now, who really destroyed capitalism in favor of Globalist Top down monopoly control and Commie insanity .
    It’s going to take a lot to undue the damage these powerful forces did to capitalism and the American way.

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