Buying a condo? Beware of high rental to owner ratios!

Have you been charmed by the thought of owning a chic condo in the heart of downtown Edmonton or its expanding suburbs? Attending the University of Alberta and need a cool space within walking distance? You're not alone. Condos have been the go-to for a mix of easy-breezy living and savvy investing. But let's chat about the rollercoaster ride Edmonton’s condo market's been on because it’s been quite the adventure.

A Stroll Down Condo Memory Lane

So, back in 2000, condos were like the hottest new gadget everyone had to have. Thanks to the low-interest rates and high demand, Edmonton home builders and developers went a bit wild, and we ended up with more condos than we knew what to do with. For condo owners, it meant their home’s equity was hanging by a thread. Investors on the other hand saw a ripe opportunity to purchase long term investments on the cheap.

When the Condo Market Takes a Tumble

This wasn't just numbers on a page; it hit home for many. Imagine watching the value of your condo fall by half — ouch, right? Many owners, especially those who might have skimped on the down payment or were juggling finances, found themselves in a bind when foreclosures started rolling in.

Too Many Condos, Not Enough Buyers

As condos kept popping up and prices fell, finding buyers became like a game of musical chairs with too few chairs. This left many Edmonton condos empty, with no one to pay for the upkeep. complexes and owners got creative to stay afloat, often renting out these lonely units.

Condos are Transitional

Condo owners tend to be more transitional in that they’re usually purchased as a first home. When kids and pets come along, condos can feel tight and restrictive (adult-only and pet-free) and some owners will opt to keep their condo as an investment property. 

Owners vs. Renters: The Condo Saga Continues

Market and owner lifestyle changes have most certainly led to an increase in rentals within Edmonton condo corporations. Here’s the scoop though: owning a condo means you're part of the club — everyone pitches in to keep the place top-notch. But renters? They're just visiting, so they might not be as into the whole upkeep and community vibe, which can be a bummer for everyone else. Noise, neglect and bylaw violations tend to be more common with high rental ratios. 

If a building’s rental to owner ratio is more than 25%, you might want to keep looking.

Realtor, Ryan McCann

How the Market Views Rental Ratios

Banks get a little nervous if they see too many renters in a condo complex. If more than a quarter of the condos are rented out, banks often get cold feet about giving loans to new buyers. That can lead to some desperate moves, like slashing prices, which isn’t great for the building's average price per square foot. Condo Buyers see high rental ratios as a red flag too, which slows both the appreciation rate and demand for buildings. 

Shopping for Your Condo Dream

But don't let this spook you! If you're condo shopping, just do your homework. Pop by the complex, chat with folks who live there, and see how many units are rented. If it's more than 25%, you might want to keep looking. You’ll need the expertise of a Realtor who can walk you through the condominium disclosure documents, more specifically, the Information Statement.

Wrapping It Up

Condo life can be as unpredictable as a plot twist in your favorite series, but you've got this. Know the history, recognize the signs, do a little detective work before you buy and get some expert advice. It's not just about snagging a cool place to live; it's about making a smart move that'll keep you smiling in the long run.

For more information about buying a condo in Edmonton, reach out to our team at 780-221-8444 or email us at [email protected].

Happy condo hunting!

 

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