You may have heard that the condo market took a bit of a hit last year at the peak of COVID-19. Numerous investors, particularly short-term rental owners across Toronto, were offloading their units, causing quite a big stir in the market. But what may have seemed like a max exodus in condo sales, was in fact, a series of strategic plays by small and large investors. Many were simply selling off their underperforming properties and smaller units in search of condo properties with far better returns. The result was an immediate boom in the pre-construction market as buyers started picking up discounted prebuilds. Larger 2 and 3-bedroom units were being scooped up at a fierce pace as more demand surfaced for bigger units to comfortably house those now working from home. More affordable cities with stable rental markets also saw a boost in sales, as investors flocked to cities like Ottawa for better cash flow opportunities.
If you were starting to get concerned that the condo market had gone bust, or there were few opportunities to make money buying and renting a condo today, you actually have nothing to worry about. Condos are a good investment today, and they will continue to be in the future. Here’s why:
The Market Has Sprung Back
It didn’t take long for the condo market to return back to pre-pandemic levels once the dust settled. In fact, sale activity has returned to normal levels while also seeing record-breaking prices this year. In Ottawa, there was a 21% increase YoY in condo sales from June 2020 vs. June of this year, with 484 units being sold in June alone. Condo prices have also gained 21% YoY, rewarding condo investors with a healthy return.
Prices Are Still Favourable
Even with record-breaking prices this year, condos are still very affordable here in Ottawa compared to other major cities. And that’s great news for investors, especially individuals looking to purchase their first investment property. To put it all into perspective, the average sale price in June reached $435,198, which is about half the price of a similar-sized condo in downtown Toronto. This makes entering the rental market much more accessible for investors looking to buy in Ottawa. And with the appreciation rate being 21% YoY and 19.9% the year before, there’s no reason to believe that the Ottawa condo market is going to cool off anytime soon.
The Stress Test’s Limited Effect
The most recent stress test was supposed to restrict buyers and slow down the market, but in reality, it has had little effect on doing either. The jump from 4.79% to 5.25% qualifying rate has only reduced purchasing power by about 4% – not nearly enough to make a big impact on those investors sitting on significant amounts of equity and cash.
If you’ve been looking for a way to make a profit by purchasing real estate, you can bet your bottom dollar that condos are a good investment play. However, to ensure that you find a property that will make you the most return on your investment, you need a seasoned real estate professional by your side. Our team at Royal LePage Team Realty McElheran & Associates have decades of experience in condo acquisition and disposition in Ottawa. We work with all the top players in the pre-construction industry and have numerous connections to off-market deals as well. Our specialists will help you find the right condo investment property that will accelerate your wealth. Contact us today to view all current condo listings and new builds within your price range.