In early 2022, condos were seen as a smart bet for older Canadians looking to secure passive income and capital growth.
But just three years later, analysts warn the sector’s downturn has cast doubt on its role as a retirement plan.
New figures show that 38.9 per cent of Toronto’s condominium apartments were investment properties in 2022, while Vancouver recorded a similar trend at 34.2 per cent, according to Statistics Canada.
Investors were initially drawn by lower entry prices and strong rental demand, but that dynamic is shifting fast.
A survey by Leger for Rates.ca found that 30 per cent of Canadians now believe condos are no longer a good investment.
Just 11 per cent said they would consider buying a condo for investment purposes, while a striking 57 per cent said they wouldn’t buy a condo at all.
The downturn is most pronounced in Toronto, one of North America’s most active condo markets.
Research by Urbanation in July revealed a 69 per cent drop in sales across the Greater Toronto and Hamilton Area compared to the previous year. Inventory surged to record highs, suggesting that supply is far outpacing demand.
In the past, many saw condos as a reliable income stream.
But rents fell for nine consecutive months as of July, making rental returns less dependable, especially as maintenance fees and mortgage costs remain elevated.
While downsizing to a condo was once a popular strategy for retirees, evolving consumer preferences are shifting demand.
Condo sizes have shrunk dramatically.
In Toronto, the average new unit has dropped from 947 square feet in the 1990s to just 640 square feet today. In Vancouver, average sizes have declined from 912 to 790 square feet.
Experts say this is due to a shift in focus toward investor buyers rather than owner-occupiers.
“Even though seniors are looking to downsize, they still want to have a backyard or space to host family,” Rishard Rameez, CEO of real estate brokerage Zown said.
“Condos, unfortunately, don’t cater to this need.”
With condos now viewed as a riskier play, financial advisers are urging Canadians nearing retirement to consider more diversified and liquid options.
