Canadian Condo Owners should be the most concerned with Rising Interest Rates and Consumer Price Inflation. Here are a few reasons why – September 19, 2022,



I’m noticing a theme with some writers CONFLATING information regarding the housing market in Canada. First and foremost, there is a SHORTAGE of detached and semi-detached homes in Canada. I’m not saying that prices for these homes can’t or won’t retreat, but the owners of these homes don’t have to sell and if they have a mortgage, all they have to do is pay it; the same is true with condos, but there are different variables when it comes to condo ownership.

First and foremost, if you own your home, you make repairs when you can afford it, you pay for your energy costs, your taxes, and your mortgage if you have one, that’s it. However, if you’re a condo owner, maintenance fees are FIXED, and maintenance fees are like rent, so you have maintenance fees, property taxes, mortgage if you have one, and energy costs, all of which you HAVE to pay for.

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I knew some homeowners with a leaky roof, and they found the cheapest way possible to fix that problem. When you own a home, there are ways you can avoid paying certain fees, not so when you own a condo, and the person you’re hoping to flip a condo to likely doesn’t want to live in a condo and would only be SETTLING for a condo if they don’t have enough money to purchase a detached or semi-detached home.

In the 1980s and 1990s, condos were a HARD SELL, condos only became an easy sell when CMHC got involved in the mortgage markets, and ofcourse Zero Interest Rate Policy(ZIRP) followed, which made flippers enter the condo space, add Airbnb. With the potential to rent out or lease your condo with limited risk and legal benefits, you got yourself a condo BOOM.

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But in 2022, a lot of people paid what I imagine is a premium for their condo; because they did this, renting out their condo comes with a lot of risks because the rent likely won’t cover the mortgage and MAINTENANCE cost, add to the reality that consumers are low on cash and what you’ll quickly figure out is that a lot of Condo owners are deeply under water if the price of their condo STOPS appreciating.

However, when you read the article below, it conflates condos and detached homes as the same housing market, so if you’re a real estate investor, do yourself a favor and don’t CONFLATE the data. I’m not saying the detached housing market can’t crash; what I am saying is that it will not crash as hard as the condo market.

Posthaste: Home price drop within ‘striking distance’ of the last big downturn — and it’s not over yet

Interesting times ahead!