Condominium investors represent 17.1 per cent of locally based unit owners in the Toronto and Vancouver markets, according to the findings of a Canada Mortgage and Housing Corporation (CMHC) survey released Aug. 8. More than half of those investors are planning to hold their last purchased unit for more than five years.

The 2013 Condominium Owners Survey’s findings provide a profile of the ever-elusive investor segment of Toronto’s and Vancouver’s condominium markets, albeit a limited one. The survey excluded Canadian condominium investors who live outside of the two cities, as well as corporate and foreign investors.

“We’ve been trying to get a handle on condo investors and this was one way that we could fill in a piece of the puzzle,” says Bob Dugan, senior economist, CMHC. “We’re covering here a subset of investors, and it was basically, for us, the easiest subset to get at.”

Since CMHC has, in recent years, stopped insuring rental units and secondary homes, the survey’s goal was simply to close this data gap and provide information to the market.

With all the anecdotal evidence of investor activity in Toronto and Vancouver, the big question for many is whether speculative investors could be driving development beyond what the market can sustain.

“The more speculative investor — those that want to buy and flip — if they get to be too big of a share of the housing market, that can lead to volatility,” says Dugan, “because if they are all flipping condos and all of a sudden a bunch of units come on the market, or flood the market, because people are trying to sell their unit, that can be disruptive.”

Of the subset of condominium investors CMHC surveyed, only 11.9 per cent reported buying their last unit with plans to flip it within a year. Nearly 60 per cent of the condominium investors surveyed planned to hold their last purchased unit for more than five years, with another 17.9 per cent of investors planning to hold their last purchased unit for two to five years.

Condominium investors who hold and rent out their unit are helpful, Dugan says, because they supplement the rental market, which has seen little purpose-built rental stock constructed in recent years.

And indeed, slightly more than 50 per cent of the condominium investors surveyed rented out their last purchased unit.

Investment horizons may be at least partially explained by expectations for unit appreciation. The condominium investors surveyed were fairly evenly split between those whose expected the value of their last purchased unit to increase (47.9 per cent) and those who expected it to remain stable (42.2 per cent) over the next year, when the survey was taken in August and September 2013.

“Time will tell … but it seems to me that investors had very balanced views about expected appreciation of units,” says Dugan. “So they weren’t overly rosy in terms of expecting price increases.”

Most condominium investors surveyed — three-quarters — owned only one secondary unit, with 15.7 per cent of investors owning two secondary units and 9.8 per cent owning three units or more.

One-third of condominium investors bought their last secondary unit within three years or less of the survey, compared to the 46.3 per cent who bought their last secondary unit six years or more before the survey. A large number of condominium investors surveyed — 88.3 per cent — didn’t intend to buy more secondary units in the next year.

None of the survey’s findings surprised Dugan. In fact, many of the findings corresponded to existing data. For example, he says, the fact that 42.1 per cent of local condo investors are mortgage-free closely mirrored census data on the number of Canadians who own their homes mortgage-free. For the senior economist, this pointed to the reliability of CMHC’s data.

CMHC merged the statistics for Toronto and Vancouver to increase their reliability. Some of the key differences between the cities were that more condominium investors in Toronto expected the value of their last purchased condominium unit to increase, and bought at least one secondary unit in presale, than investors in Vancouver.

The survey reached 42,426 households (17.1 per cent of which were identified as local condominium investors) across the two cities, as defined by census metropolitan areas. According to CMHC, the survey’s approximate margin of error for the sample of secondary condominium unit owners is three per cent, at 95-per-cent confidence.

CMHC has previously attempted to collect data on foreign investors but has not come up with a number it deems reliable enough to publish, Dugan says. Using land registry data, CMHC has compared property addresses to where tax assessments get mailed. Different addresses might indicate an investor, but a tax assessment could also get mailed to a local accountant or lawyer or property management company, skewing the results.

“We’ve tried, and we’re going to continue to try, but we haven’t found the ideal solution yet,” Dugan says.

Michelle Ervin is the editor of CondoBusiness.