Torontonians worry about affording their mortgage
But many don’t mind paying for the perks of condo living
Four-in-five condo buyers in Toronto (81%) say they worry about being able to afford their mortgage payments. Still, of all cities surveyed in the 2012 TD Canada Trust Condo Poll, Torontonians are willing to pay the highest monthly fees for the convenience and amenities that a condo offers.
According to the poll, which surveyed urban Canadians who recently bought or intend to buy a condo, four-in-ten Torontonians are willing to pay more than $400 per month (39% versus 21% nationally) and 17% more than $600 (versus 10% nationally) in fees. A number of Torontonians say some of the main reasons they’re drawn to condos are that they require less maintenance (59%), are more affordable (36%), and offer more amenities (34%) than a house.
“Remember, to be truly comfortable in your home, you need to be comfortable with the payments,” says Farhaneh Haque, Director of Mortgage Advice, TD Canada Trust. “Managing your housing expenses is about prioritizing your needs and budgeting accordingly. It’s clear that the convenience of condo living is important to many Torontonians, and they are willing to pay the monthly fees. But – your fees and mortgage payments should not leave you living paycheque to paycheque.”
Despite concern from some Torontonians over their monthly mortgage payments, three-in-ten (29%) have built a buffer into their budget to prepare for the possibility that their condo fees increase. Another 36% say they would need to cut back, but they could afford a fee increase.
“The possibility of a fee increase can be a little unnerving,” says Haque. “While there’s no way to ‘lock-in’ to a monthly fee like you can with a mortgage, you can prepare for a fee increase by building a buffer into your monthly housing budget, as some Torontonians have wisely done. That way if fees go up, it won’t be a major shock to your cash flow. If they don’t increase, you have extra money to put aside in savings or towards your mortgage. You can also explore flexible mortgage options that allow you to pay more towards your mortgage when you can, then, upon an approved application, ease off on payments when you need to. This can be a useful feature in the first few months of transition to a fee increase.”
Top features Torontonians look for in condos
According to the poll, Toronto condo buyers think the most important features when deciding on a condo to buy are:
1) Energy-efficient building features (95%) and attractive interior design features (95%)
2) Good building security (94%) and low condo fees (94%)
3) Close to public transit (89%)
4) Close to theatres, restaurants and shopping (88%)
5) Environmentally-friendly building (87%)
Torontonians also consider the social scene at their building. More so than any other Canadian cities surveyed, Torontonians said they looked for social activities between neighbours (55% versus 40% nationally) and a group of neighbours similar to them (66% versus 56% nationally).
Condos as stepping stone to home ownership
Many Toronto condo buyers see condos as an affordable alternative to renting: 26% say owning a condo is cheaper than paying rent. But, one quarter (23%) say paying condo fees still feels like paying rent so they are saving up to buy another place where they won’t pay monthly fees.
“Purchasing a condo allows you to build equity rather than continuing to pay rent as you save for a house,” says Haque. “At the same time, it’s important you talk to a mortgage expert, because it’s not just a straight comparison of your monthly rent and some utilities to a monthly mortgage payment and condo fees.”
Condos as investments
One-third of Toronto condo buyers (34%) say the main reason for their condo purchase is that it is a good investment. Recent housing forecasts do not seem to have fazed Torontonians. In fact, 46% say recent forecasts have made them more likely to buy a condo – and only 17% say it has made them less likely.
Of all cities surveyed, Torontonians were most likely to own a condominium that is not their primary residence (30% versus 26% nationally) and also most likely to consider purchasing a unit that is not their primary residence (27% versus 23%). Toronto condo buyers see a number of benefits to purchasing a condo as an investment:
* 44% think they are a good investment to buy and sell at a profit when prices have gone up
* 39% see them as a long-term source of rental income
* 37% see them as a source of rental income for now that they will move into later when they are ready to downsize
* Torontonians are most likely in the country to say they would consider buying a condo as a home for their adult children who will eventually own it (24% versus 15% nationally)
“Recent housing forecasts have predicted that an over-supply of condos will cause a drop in prices. How this affects your decision to purchase a condo comes down to your goals at that time,” says Haque. “If you are buying a condo and see it as a source of rental income that you’ll move into when you are ready to downsize, this drop in value will likely not have a big effect. On the other hand, if you see a condo purchase as a way to build equity as you save up to buy a home, you need to consider the potential effect of a decreased price when you sell on the money you have towards a down payment for a house.”
Contact the Jeffrey Team for more information – 416-388-1960
Laurin & Natalie Jeffrey are Toronto Realtors with Century 21 Regal Realty.
They did not write these articles, they just reproduce them here for people
who are interested in Toronto real estate. They do not work for any builders.
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