Syrianos argues that the price drops in many condo markets has opened up a more attractive entry point for new investors and buyers. He argues, too, that while many condo developers pivoted to purpose-built rental in recent years, that supply will take time to come online, offering investors the chance of rents that cover carrying costs. Interest rate cuts have helped, too, and mortgages with something more than the minimum down payment now look more sustainable at today’s rent prices.
While the worst of the condo downturn in major cities was compounded by the rise of remote work, Syrianos also takes the return to office mandates handed down by the big banks and other major employers as a potential boon for this market. As more workers come into downtown cores and work in the office, more conveniently located housing options may become more attractive again.
Syrianos acknowledges that this market cycle may seem excruciatingly slow for some investors. He cites his own experience in the 1990s and highlights how hard these downturn periods can be for property owners. Nevertheless, he believes that market is approaching or is at its bottom and that numbers should begin to change as rate cuts are digested and more investors enter the space at better price points.
That is not to say Syrianos believes price appreciation will be immediate. He sees the remaining supply absorption as a two or three year process that any investor will have to cope with. He argues, though, that as the existing overstock of condos is digested by the market the wider Canadian housing shortage will play a role in re-starting price appreciation for these assets. It’s no longer the kind of environment where investors could rely on appreciation to the point where they might not even need to rent out the unit, but those investors who can stomach being a landlord may be better positioned than they thought.
For advisors working with condo investor clients, Syrianos argues that there is a case to be made for some hope. Even if the cycle is longer than clients might like, there is now a light at the end of this tunnel.
