Over the years, we have spoken a lot about the role that investors play in Toronto’s pre-construction condominium market. In the media, they are often spoken about pejoratively. They are seen as being a well-capitalized group that outbids end-users for a limited supply of new housing.
But on the other hand, we know that (1) they have been a major contributor to new rental housing in this city (they filled the gap after we decided in the 1970s that we didn’t like purpose-built rentals) and that (2) they play an important function in getting new housing financed.
For better or for worse, we know that, without an investor market, there would have been far fewer new homes constructed over the last cycle. Pre-sales are generally always a prerequisite for a construction loan. And the fastest, and therefore safest, way to get pre-sales is/was to target investors.
But the world has changed since then. Investor demand has diminished. So much so that you could argue that the opposite is now true.
I was speaking to my friend Christopher Bibby this morning and he reminded me that end-users, who are passionate about specific projects and neighborhoods, are the more resilient demand base during a downturn. Because if you need a place to live, you need a place to live.
Perhaps it’s no coincidence that every single sale that we have had at Junction House this year has been to an end-user who moved in.
‘.. they have been a major contributor to new rental housing in this city (they filled the gap after we decided in the 1970s that we didn’t like purpose-built rentals) …’
You mean they organized politically to destroy government funded non-profit affordable housing and then profited from it demise.
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“Multi-rental housing development was supported by favourable tax law in the 1960s, and large private rental incentive programs in the early 1970s. New social housing was funded in large volumes and was integral to metropolitan planning. From the 1980s onward, social housing was built by and/or offloaded onto municipalities and community-based agencies scattered across the City’s outer suburbs; however, by the 1990s municipal funding for the development of social housing dwindled severely (gradually less and less until it remained little).”
https://www.yorkcoop.org/education/multi-tenant-housing-101/history-of-rental-housing-in-toronto
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