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Though a rough estimate, the shortfall suggests this year’s drop in mortgage rates has not kept pace with the plunge in rents, particularly when landlords face additional monthly costs like condo maintenance fees and taxes on top of mortgage payments.
Priced to Lose
In Vancouver, similar distress is showing up in a public Facebook Inc. group frequented by Vancouver area real estate agents. Posts began appearing last month saying clients were willing to take a loss in order to get out of contracts for units finishing construction over the next year.
“Priced $55k below purchase price,” read one all caps message from Nov. 10, trying to sell a two-bedroom unit due to be completed in December. “Current owner is selling at a $50,000 loss,” said a post from Nov. 3 offering two bedrooms near Vancouver’s waterfront set to finish construction in the first half of 2021. The real estate agents who posted these and other similar messages on the group did not respond to Bloomberg News’ requests for comment.
You are losing some of the trade-up buyers due to this pandemic. I don’t know if that’s enough to upend this market but it’s certainly a headwind
Ben Rabidoux, president, North Cove Advisors
“It’s the next six to 12 months that really is what’s going to be painful,” said Wright, the Toronto condo investor who reckons she and her business partner could sustain the losses, but is also looking for a buyer if she can find one. She called it a “reality check” on real estate investing.
Recent listing data in Toronto and Vancouver suggest it’s not just people who bought pre-construction who are now looking to get out of the market. The City of Toronto saw the number of condos listed for sale double in November from the year before, causing average prices to fall 3 per cent the latest data from Toronto’s real estate board show. Meanwhile in Vancouver, the benchmark price for an apartment unit registered a 1 per cent drop from the previous month as listings rose there too.