Steep Mortgage Rates Put Pressure on Canadian Landlords Prompting Consideration of Property Sales

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Canadian landlords, particularly young investors, are feeling the pressure from steep mortgage rates, pushing some to consider selling their properties. Higher interest rates have significantly impacted the business case for investment properties, causing financial strain for landlords. Karim Najjar, a 32-year-old landlord, has seen his payments increase to the point where he's taking a monthly loss on one of his properties. While he could raise the rent or sell the property, he is reluctant to displace the family living there. The Royal LePage survey indicates that nearly a third of investors are considering selling their properties due to higher interest rates, with younger owners being the most likely to own multiple properties and also consider selling.

The survey also reveals that Canadian landlords aged 18 to 34 are more likely to own multiple properties compared to other age groups. The housing market's stability, rising immigration levels, and the appeal of tangible assets have driven younger Canadians toward real estate investment. However, increasing interest rates have led to second thoughts for many young investors, with over half of those aged 18-34 considering selling their properties. Experts caution that exiting an investment property involves more calculations than selling a primary residence, as it may be subject to capital gains tax.

Despite the challenges posed by rising interest rates, there is still confidence in the housing market as a solid long-term investment. The survey suggests that a significant percentage of Canadians plan to purchase investment properties in the next five years. However, experts emphasize the importance of considering the risks and challenges associated with being a landlord, such as fluctuating mortgage rates and potential vacancies. They advise approaching real estate investment as a business decision with careful planning for varying market conditions.

Read the full article on: Global NEWS