As regular readers of this page know, the investment case to buy a condo as a rent to hold asset is a losing proposition even at our historically low borrowing rates as demonstrated by my recent Vancouver Condo Case Study.
Now that we have bond yields zooming, the alternative to real estate term risk is to sell.
Sheryl King, Special to The Globe and Mail, July 2, 2013: "Prognosis grim for Toronto condo investors" makes some relevant points:
- Sheryl's sober math produces a net rental yield of 0.16% per annum on her Toronto condo example.
- New regulations: shorter amortization periods result in 100 beep increases in the 5yr rate.
- Price correction fears: condo prices up 1.5% Y/Y, but sales down 11% Y/Y in May 2013.
- Stats-Can Household Formation demand for condos could be wrong by 50%
- Condominium builders are adding 3 more years of supply to the existing 3yrs of supply.
Full Globe & Mail Article here.