Toronto Condo and Real Estate Blog

Needs differ. Young and old, rich and not-so-rich clash

Kelvin Browne, CanWest News Service

A new kind of class war has broken out. It pits young against old, rich against the not-so-rich, first-time buyers against retiree last-time buyers.

Where’s this happening?

In a condo tower near you.

Condo towers offer a fantastic array of suites. In one building, there’s often a range of options, from little wee studios to the multi-bedroom, multi-floor spreads. In the sales office, this seems like a good idea. But it’s not so nice when the thing gets built and everyone moves in.

Guess what? The person who bought the 450-square-foot studio with a tiny balcony and no parking is quite a different person, with very different ideas about how he or she wants to and can afford to live, than the 60-year-olds who sold their house for a bundle and bought the three-bedroom penthouse with enormous terraces and two parking spots. Now, they have to co-exist and manage their condo building together.

Class lines are usually simple to draw. The bottom third of the building consists of small suites stuffed with first-time buyers, often in their 20s. If they’re single, it’ll likely be their first home, maybe the first time living outside their parents’ home. Weekends can be a blur with lots of loud music.

In the middle are larger units, populated by young couples without children. These people are often saving for a home so they can start a family. While not quite the party scene found on the lower floors, these people feel entitled to play their music at any volume they like and generally feel entitled about everything.

And then, in the top third, are the empty-nesters, many of whom have sold their houses at great profit and bought a condo for their retirement. They travel, have summer homes and/or places for the winter in Florida or Arizona. They spent a fortune buying their condo and likely invested in costly upgrades.

The class wars start because owners have conflicting notions about how to live. Those on the lower floors like to stay up late most nights. The insides of their apartments are filled with Ikea, not antiques, and they can be rough on a building’s public spaces. They don’t much care where they chain their bikes or what their backpacks scratch in the elevator.

Those in the top floors of the condo aspire to life the way it was portrayed in the marketing ads. They want perfection inside their apartment and outside. They notice every chip of paint and every stain on the lobby’s carpet. They don’t much like the fact that some of the owners in the lower parts don’t comb their hair or haven’t given up their piercings yet.

For those at the bottom, it feels like their parents are living above them. For those on top, it’s like the kids have moved back home. It wasn’t always this way; buildings used to have a more homogeneous mix of apartments. Often, the same unit style went from top to bottom, with only minimal price increases for higher floors. Usually, the price difference was not significant between most of the units, aside from the premium for penthouses. Developers often assumed they were catering to a relatively narrow range of consumers, one focused on the neighbourhood or price point. Now, a building can have a United Nations diversity, with an age spread that even the UN doesn’t have to cope with.

While living together is bad enough, managing together is worse. The lower part of the building will do anything to keep condo fees down. They don’t have any money; thinking a week ahead is long-term planning. Meanwhile, upstairs, the oldsters want to build a massive reserve fund, constantly improve the building’s aesthetic, increase security and make more rules for owners. (No storage on balconies, no bikes in the halls, no parties after 10 p.m. and so on.)

The battles are going to get worse. The people on the top aren’t going anywhere and are getting older and crankier. Everyone else is moving on to houses or bigger condos; they’ll be replaced by younger people. The age and wealth gap will intensify - welcome to high-rise hell.

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Contact the Jeffrey Team for more information - 416-388-1960

Young buyers willing to raise family in condos, but want green features

Sheila Brady, The Ottawa Citizen

Rising housing prices in Vancouver and Toronto are prompting more Canadians to buy condos, with some younger buyers predicting they would be willing to raise a family in these vertical neighbourhoods, according to a survey for TD Canada Trust.

Nine out of 10 respondents to the on-line survey also rated green or environmentally friendly and energy efficient buildings very important when deciding to buy, according to the annual condo survey conducted by Ipsos Reid for TD Canada Trust which was released earlier this week.

Eighty per cent also indicated proximity to public transportation was also key when deciding where to buy, says the online survey which polled 725 adults 18 and older living in Toronto, Vancouver, Montreal, Calgary and Halifax between March 1 and March 5.

Ottawa was not part of the survey, but would likely have a similar response to Montreal, says Joan Dal Bianco, vice president, Real Estate Secured Lending for TD Canada Trust.

Condos are a more popular housing choice in Vancouver and Toronto because of high housing prices and the high price of land, says Dal Bianco, adding a majority of respondents did not want to spend more than $400,000 for a condo.

Between 15 and 20 per cent of all new homes sold across Ottawa are condos, traditionally appealing to baby boomers trading their family homes for an urban address and for young professionals buying their first home.

Toronto condos are also getting bigger, meaning they provide better housing options to raise a family, says the banker, adding it is now not a given that couples automatically sell their condo and move to the suburbs when they start a family.

High prices are a contributing factor, but there is also a desire to stay in the urban core.

“More people are now more comfortable living in the city with children. There is the convenience of living close to work, she says.

The proportion who would consider raising a family in a condominium has increased significantly to 30 per cent from 20 per cent a year ago,.

The survey also found that respondents valued security when looking for a condo and low monthly condo fees.

The green issue is also becoming increasingly important because people are more aware, there is a government focus and more media attention, says Dal Bianco.

Surprisingly, it was older respondents who valued the green factor higher, she says, adding boomers realized the energy savings when going green.

In Toronto, Minto is building energy-efficient condos and in Ottawa, Windmill and the Westeinde family is behind construction of the Currents, an eco-condo on Wellington Street that will also be the new home of the Great Canadian Theatre Company.

The TD is also considering launching green financing, giving preferential rates to buyers of eco homes, says Dal Bianco. “Stay tuned. There could possibly be a program announced in the spring. It is a busy period.”

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Contact the Jeffrey Team for more information - 416-388-1960

Garry Marr, Financial Post

One of the largest mortgage insurance companies in Canada has looked into the future of real estate and it’s dominated by a small box in a high rise.

The condominium market is not slowing in the country’s six largest cities, says a new study prepared by Genworth Financial Canada and the Conference Board of Canada. If anything, condominium apartments are becoming the standard for housing stock in Canada.

“People want the condo lifestyle. As they get older they want the lock-and-go condo lifestyle as opposed to cutting the grass,” said Peter Vukanovich, president of Genworth Financial, which controls 30% of the mortgage insurance market in Canada.

The study found that in Montreal, Ottawa, Toronto, Calgary, Edmonton and Vancouver sales of condominiums have been growing annually in the range of 9% to 20% from 1996 to 2005.

In some key markets, condo sales are soon expected to account for 75% of the new housing stock. Almost every city shows the condominium market share rising rapidly.

“It’s a much cheaper lifestyle than a single-detached home,” said Mr. Vukanovich, in explaining part of the reason for the preference. The average price of a condominium tends to be much lower than a detached home.

About the only cloud that continues to hang over the sector is this vague concept that the condo market is somehow headed for a crash, said Mr. Vukanovich, noting that people see these condos being built and they figure this all has to end.

“We have a report coming out on renters and the No. 1 concern they have is a fear of the price of what they are going to buy is going to come down,” he said.

Those fears appear to be unfounded based on the study, which shows prices rising by 3% to 5% annually well into 2011 across the six cities studied.

Alberta is the lone exception. Calgary and Edmonton are expected to see double-digit price increases.

On a city-by-city basis, Vancouver has become the condo capital of Canada. Dating back to 2001, Vancouver condos accounted for about 35% of all new construction. Condos are expected to have grabbed 75% of the annual residential construction market by 2011.

The study says pent-up demand from the 1990s, when housing in Vancouver slumped, has driven the market the past five years. Condominiums have become an attractive alternative in the city where bungalows routinely sell for $750,000.

The Conference Board says the average price of a condo, just $214,031 in 2004, will climb to $364,689 by 2011. Genworth says there is something about the city’s makeup that has led to residents embracing condo life.

“You can’t underestimate the Asian influence and they are very comfortable with the condo lifestyle, whether they are living in Hong Kong or Shanghai,” said Mr. Vukanovich. “They are coming here and buying condos.”

Toronto and Ottawa-Gatineau are the only markets where the condo share of overall construction seems to be levelling off. But despite that, condos account for almost 40% of new house sales in Toronto and 20% in Ottawa- Gatineau.

“It sure looks like everybody is going to be in condos. This is definitely not going aw ay,” said Mr. Vukanovich.

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Contact the Jeffrey Team for more information - 416-388-1960