On the waves of rising interest rates, investors in condos prefer to sell properties against the backdrop of increasing mortgage rates.

As of today, more and more real estate investors are leaving the Toronto market due to the rise in interest rates, leading to an increase in the number of new listings. Investors who purchased real estate between 2020 and 2022 at low variable interest rates are now selling it due to tripled increases in mortgage payments. Even those who bought real estate at a fixed rate and are extending their mortgage are considering the possibility of exiting the market. It is expected that this trend will continue into the next year, leading to a greater exodus of investors from the market and impacting the rental pool and property availability.

It's true that there are more apartments appearing on the market, but I don't believe the market will be "flooded" in the very near future. Investors are opting for fixed-rate mortgages, and their payments will not change until their mortgage is renewed anytime between 2025 and 2027, and who knows what interest rates will be like then?

But how to cope with increased payments for those who have already chosen a floating interest rate mortgage?

This depends on the situation. Sometimes, you have to accept short-term "pain" for long-term gain, and in some cases, it may be worth losing money every month, knowing that the unit's value will continue to rise. Although there are no guarantees that the market will grow in the future, history has shown that it does.

I ask clients considering selling questions to ensure they are not panicking:

• What are their plans for the money they will receive from the sale?

• Have they spoken to their accountant to discuss the capital gains implications?

• It's important to consider how much they paid for the unit and give them an estimate of what it will sell for. Sometimes, selling is the right decision if it simply helps alleviate a huge amount of stress... if the stress is short-term and there are other options to fill the deficit, then perhaps selling is not the right decision.

• And one more question, who is currently residing there, and have they considered the risks associated with selling a rented space?

The last question is crucial: by law, a landlord can terminate a lease if the initial term has ended and it continues on a month-to-month basis, and they or a family member move into the apartment or sell the apartment, and the buyer moves in, but this scenario comes with risks. Most tenants leave without conflicts, but not all, as demand, and consequently, rental prices, have risen significantly.

This is already a slightly different, separate "story".

As of today, the price for a one-bedroom apartment in the city center starts from 450,000. The price range is quite large and depends on the area, size of the apartment, etc. In Liberty Village, a one-bedroom apartment will soon be listed on MLS for 550,000.