Toronto Condo and Real Estate Blog

By Alex Veiga - Associated Press

For many aspiring homeowners, buying a Toronto condominium can be an affordable way to move from renting to owning a home that doesn’t have a lot of the added costs involved in maintaining a house on a piece of property.

Condos also may come with added perks many first-time buyers might not be able to afford in their starter home, such as a swimming pool or hot tub, or resort-like amenities such as tennis courts and security guards.

But the condo life also requires owners to give up some of the freedom they would enjoy if they owned their own detached home, all while being exposed to onerous maintenance fees on top of their mortgage payments.

And too often, experts say, condo buyers don’t stop to consider exactly what they’re getting into.

“The biggest single mistake that people tend to make is to think that buying a condo is just a less expensive way of buying a house and not really understanding that it’s shared ownership, which is a lot different,” says Robert Irwin, author of Tips and Traps When Buying a Condo, Co-op or Townhouse.

“They aren’t going to be able to do a lot of the things they can freely do when they own their single-family detached house,” Mr. Irwin says.

Still, there are steps buyers considering a condo purchase can take to ensure they know what to expect before taking the plunge.

The first thing to do is try to find out how much you will have to pay in maintenance costs, or monthly homeowners association fees. You also want to know if there are any big special assessments on the horizon.

Special assessments are fees that condo associations sometimes decide to charge owners in order to pay for an unexpected cost, such as an emergency repair, litigation or even to help cover a shortfall in monthly dues.

Assuming that the maintenance is reasonable and there aren’t any special assessments on the radar, you can delve deeper.

You may be happy with a building’s looks, the size of the unit and location. But a condo is real estate, just like a detached home. And just like a detached home, the value of a condo will rise or fall largely based on how comparable units sell.

Buildings with high proportions of unsold, empty units can send the wrong signal to buyers and can hurt comparable resale prices.

Also, a condo complex that has too many investor-owned units being rented rather than occupied by owners can make it tougher to obtain financing, experts say.

“The first thing I want to know is what the occupancy rate is,” says Ken Roth, author of Everything You Need to Know Before Buying a Co-op, Condo or Townhouse.

In a market with declining sales and home prices, condo owners who bought during the peak or speculators who bought with the intention of unloading their properties quickly could be in financial trouble, particularly if they took on risky adjustable-rate mortgages, Mr. Roth says.

Buyers looking to snap up a unit in such a complex might find it difficult to get a mortgage because banks typically won’t finance or will charge a premium to finance a unit in a building where 40% or more of the units are rentals, he explains.

Therefore, condo buyers should find out what the occupancy rate of the building is and what percentage of its units are being rented out by their owners. Ask the homeowners’ association, or in the case of a new building, the developer.

Experts advise buyers to examine the financial state of a developer and to ask to have some guarantee that any money you put in toward a unit in a building under construction be kept in escrow.

One gimmick to watch out for is when developers advertise a building as 80 or 90% sold.

That sounds good, but sometimes what developers are really saying is they’ve sold most of the units they’ve put on the market, rather than most of the units in the building.

The next key step when considering a condo purchase is to go over the building’s condo rules, conditions and restrictions documents, which are typically handed over to buyers when the contract is signed.

The documents are crucial because they spell out the rules on everything from how parking spaces are assigned to what types of restrictions owners must heed for remodelling and decor.

Too often, buyers don’t look through these documents thoroughly and end up in a bind after it’s too late.

That’s what happened to Tara Washlack and her husband, first-time home buyers who purchased a condo in Los Angeles in July, 2007.

The couple skimmed through the condo documents and later ran into trouble when they wanted to install a satellite-TV dish. The condo rules, however, prohibited the installation of such hardware on the building, says Ms. Washlack, a pharmaceutical researcher.

The condo rules also did not allow the Washlacks to run a TV cable through a different location in their unit because it would have been necessary to drill a hole in the exterior of the building. They also couldn’t add an overhead light in their living room because they’d have to run cables through the building’s roof, Ms. Washlack says.

Then, they discovered they couldn’t install a canopy on their balcony.

“That’s one of the things that was disclosed to us, but again, it was overlooked since we had thousands and thousands and thousands of pages [to read],” says Ms. Washlack, 29, referring to the condo documents. “I think for the average homeowner it’s kind of an overload.”

One other big reason to plow through the documents closely is to find out what the condo association’s financial picture looks like and whether it is involved in litigation.

Although the homeowners’ association will typically have some insurance coverage for litigation, it may not completely shield owners from liability, Mr. Irwin warns.

“If you get into a situation and you find where there’s a whole bunch of lawsuits going on - regardless of how well you like the physical layout and the building itself,” he says, “it may be the sort of thing you might want to pass on.”

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

While some condominium prices are skyrocketing — a $17 million penthouse? — choose a unit in an emerging neighbourhood and the prices become very affordable

By Ian Harvey

Psst! Wanna bargain in the red-hot Toronto condo market? There’s penthouse luxury on the 75th floor at Yonge and College Sts. for a mere $1,590 a square foot, compared to similar units in Yorkville, the Ritz Carlton or Trump Tower which are commanding $2,500 a square foot.

The catch: You have to buy all 11,000 square feet at a total cost of $17.5 million.

Welcome to the crazy world of new Toronto condominiums where sales are eclipsing new single family homes by three to one, according to the Toronto Building Industry and Land Development Association (BILD). But how do you compare value when the price per square foot seems to vary so widely?

Toronto condos generally range from about $350 a square foot or less, to a seemingly outrageous $2,500 a square foot downtown, says Jeanhy Shim, president of ThinkBuild Consulting, which tracks and analyzes condominium trends. The key, though, is to figure out what you’re actually getting for that, beyond space, and how your investment will appreciate against the market average in the years ahead.

For first-time buyers, the key driver is qualifying for a mortgage and they’re happy to look at smaller units, less centrally located, often in the suburbs. Many are new Canadians for whom highrise life is the norm, far removed from the “Canadian” vision of single-family home with a white picket fence.

The more units a developer can squeeze into the building the lower the price. Conversely, if they opt for fewer units and fewer floors, the price changes proportionately. And having a unique design like that at Pier 27 – two storeys of glass and steel with a three-storey bridge across the top – on the waterfront will also drive prices up since it costs more to build and is a cut above the standard glass box, says Shim.

Add in features like subway access, pool, gym, heated parking, storage lockers, rooftop gardens, 24-hour concierge, party rooms, private theatres and it also affects the price. The biggest factor, however, is and will always be that old cliché, location.

Aura at College Park is a prime example. It has a central location, direct subway access and a planned connection to the underground PATH system of tunnels. As Rizwan Dhanji, vice-president, sales and marketing for Canderel Stoneridge Equity Group Inc. notes, the location and proximity alone ensure it commands a premium price.

It will also have the the cache of being the tallest condominium building in the country, with 75 floors and spectacular views. Factor in that the site will also offer easy access to the cultural attractions of the city, and luxury finishes in the suites and the value proposition starts to climb.

“But at $900 to $1,000 a square foot (regular penthouses) it represents great value compared to say, the $1,500 to $2,000 a square foot you’ll pay in Yorkville,” says Dhanji, adding it’s still well below what condo buyers in Vancouver are paying and a fraction of the cost in cities like Singapore, New York and Paris.

With the 930 units already 80 per cent sold, Canderel is about to release the premium penthouse units on the 72nd to 75th floors. Among those units will be a castle fit for a king – that 11,000 square feet penthouse for $17.5 million.

For the rest of us mere mortals, there’s no substitute for location, Shim says. And buyers have to decide if they’ll give up space for the right address or go a little farther out for more room.

“There just aren’t a lot of sites left directly on the subway,” Shim notes, adding that outside of the old city of Toronto boundaries one of the few areas still commanding competitive prices is the Yonge-Sheppard corridor.

Monarch Park’s Ultra at Heron’s Hill, at Don Mills Rd. and Highway 404, is an example of a mid-city project with suburban amenities like the nearby Fairview Mall and Don Mills subway station. The 38-storey-building is offering units that range in size from 517 square feet to 930 square feet and prices from $173,990 to $357,990, which is about $340 to $380 a square foot.

Similarly, Elm Sheppard Inc’s Portrait condominiums, at Bathurst and Sheppard, has great access to Highway 401 and local parks and amenities, with prices starting at $371 a square foot.

Come in a little closer, to just east of Yonge near Leslie St. and Aspen Ridge’s Scenic is targeting families with units averaging 900 square feet at between $350 and $500 a square foot. Camrost has units in the Lawrence and Don Mills area, at the newly renovated Don Mills Shopping Centre, with prices averaging $375 a square foot.

If a condo in the old city of Toronto is the dream, Shim says savvy buyers, should look at emerging neighbourhoods. And there’s more than one way to pick the next King Street West, Yorkville or Distillery neighbourhood, says Jessica Speziale, market co-ordinator at Options for Homes, a non-profit group, which develops affordable housing condos in Toronto.

Options has a project with 643 units in the Junction neighbourhood at Keele and Dundas Sts. with prices starting at $168,000, pretty much a bargain in the current Toronto condo market. It’s an up-and-coming area, which will flower as it transitions from industrial to inner city residential. The building has little in the way of amenities like a pool or gym. And because Options is non-profit, it has also engineered a process to give buyers an option to lower their mortgage with a no-interest-loan which is repaid only when the unit is sold – in addition to a percentage of any profit. Options for Homes’ next project is at Bathurst and Lawrence – see optionsforhomes.ca for details.

Private developers are also turning down-and-out areas into vibrant communities. Daniels Group, for example, Shim says, is the driving force behind the revitalization of Regent Park.

“They’re actually building One Cole (in the Dundas-Parliament area) before selling units, which is unheard of,” Shim says. “And they’ve got the grocery store and the bank going in.”

Electric City is another development in the emerging area of Davenport Village where developers Tom and Robert Falus are building homes on the site of the former General Electric and American Standard plants at Dupont St. and Lansdowne Ave.

Starting at just over $300 a square foot, it’s a value-driven offer especially given the upscale touches and finishes found in units demanding twice that. Part of that price reflects that it’s an area in transition.

It’s also, in part, because as Tom Falus says, they got the land for a decent price and can pass that on to buyers.

“This is part of 3,000 units we’re putting in the area,” Falus says. “So we have a long-term plan and want to drive sales. I plan to limit my profit and hope we get better prices as we go forward.”

The project appeals to first-time buyers looking for a home in the city, he says, near transit.

Those hesitant about moving into an unknown corner of the city need only look south to the Distillery for inspiration.

“Our first project was at the Distillery in 1998 before it was really anything but an old abandoned industrial site and barren wasteland,” Options For Homes’ Speziale says. “You could have bought a unit for $70,000.”

It’s one of those “darn, if I’d only known” moments given that the Gooderham, the third phase of condos at the historical arts enclave, now offers units starting at $257,000 for 500 square feet and rising to well over a million dollars for the 1,600-square-feet-plus units. The penthouses were slated to be released this week.

“When we started there was nothing,” says Mathew Rosenblatt, partner at Cityscape, which bought the property in 1997. “Except for the best collection of Victorian industrial architecture in North America.”

Indeed, those early years meant lots of investment before the returns started rolling in on the construction of Pure Spirit, the first phase of condos. The second phase, Clear Spirit, with 524 square feet to 1,153 square feet also sold quickly, driven mostly by the happy owners in the first phase, says Rosenblatt.

What buyers are getting, beyond the unique nature of the Distillery District, are also unobstructed views, since there aren’t any other highrises in the area and, given the proximity of the CN tracks, the Lakeshore and Gardiner Expressway, any that are built will be farther away, lessening their impact.

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

What You Should Know Before Buying.

Condominiums are a great alternative to home ownership. If you’re looking to buy your first home, or want to downsize, chances you are considering buying a condominium. There are a few things that you should know first before signing on the dotted line.

It’s often said that buying a condominium is buying a lifestyle. What does that mean?

Condominium living is different from owning or renting a detached house because condominiums have a dual nature. Condominium owners hold title to their units and share responsibility for the operating costs of the balance of the property (common elements such as lobbies) that makes up the condominium.

There are many advantages to condominium ownership. It may be less expensive than other types of home ownership. It can provide an “instant” sense of community. While someone else is shovelling the snow, you could be enjoying a swim in the shared warm water swimming pool.

However, condominiums are not everyone’s cup of tea. Condominium corporations may set restrictions on things such as owning pets or having an outdoor barbeque.

How is the condominium managed?

A Board of Directors, elected by the owners, manages the condominium association. Major decisions are voted on at owners’ general meetings. Participation in community decision-making is a benefit of condominium living.

Conditions and Restrictions

Condominiums are governed by a set of rules called Covenants, which are enforced by the condominium association. Condominium Conditions and Restrictions (CC&Rs) vary from one development to another. The CC&Rs may impose restrictions on noise levels, renovation projects, pet ownership and renting.

As a potential condominium owner, you should be comfortable living within the rules and restrictions of the condominium association and living in close proximity to others.

Condo Fees

The condo or owners association budgets and determines the fees for all units, usually based on the size of each unit, the number of units occupied and the projected expenses for maintenance and repair.

Every condo owner pays fees to help maintain the building, pay the salaries of concierges, handymen or groundskeepers, and provide facilities such as a pool, gym or gardens. The fees are paid monthly and are subject to change.

Special assessments could be made when an unexpected repair or planned modification exceeds the cost of the condo fees collected.

Questions to ask!

It’s absolutely critical that you read and understand the documents given to you when you are purchasing a condo. The association is required to give you all documents affecting the use of your property. These documents will tell you absolutely everything you need to know, what you can do and what you cannot do. If you don’t have a clear understanding of the information provided in the documents, ask for clarification so that you know what you are getting into.

Request copies of minutes from the past two years from the Board of Directors’ meetings. If there are any major problems with the condominium association, this is where you’ll find it. The association is required to have regular meetings and make the minutes available. Be absolutely sure to do this so that you are aware of any major problems with the bureaucracy of the condominium association that would make living in the condo undesirable.

Ask owners for comments or complaints about the association’s activities and reputation.  Find out if there any plans to add to the facilities, such as a swimming pool or gym? Such projects can mean a rise in fees. The minutes of the condo association meetings should reveal any such plans.

Be aware of the marketing hype

If you are thinking of buying a pre-construction condominium unit, be aware of the marketing hype, and bear in mind you are buying from plans. You may be surprised to learn that the beautiful rooms you saw in the model suites are not necessarily like the ones you’ll live in once your building is complete.

The den on your floor plans may become a walk-in closet by the time you move in. And the fantastic view you see in the building model, may soon get distracted by the following phases of the project. Your dream condo may turn out to be dog and you may not get what you paid for.

On the other hand, if you get a prime suite, you could make thousands of dollars in profit by the time you receive your keys.

Your real estate agent can help you avoid the pre-construction sale pitfalls and help you make the right decision.

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