Tag Archives: buy a condo
Condo living is not for everyone
Don’t ignore concerns about the building, the lifestyle or the way the complex is managed
By Inst. of Chartered Accountants
There are as many reasons for choosing condominium living as there are people who buy them. For some, it’s the location. Others want the amenities condos can offer, like exercise rooms, pools or tennis courts. Then there’s convenience – home ownership without the snow-shovelling, lawn-mowing or upkeep of a private residence.
But whatever the reason – convenience, location or facilities – it’s important to know what you can and cannot expect when you buy a condo … and what constitutes value in today’s real estate market.
Chartered Accountant Alenna Morresi-Emer is chief financial officer with Morrison Financial Services Limited. It’s a Toronto firm that provides CondoCorp Term Financing to condominium corporations who, due to unforeseen expenses, require assistance in repairing or maintaining their common elements. She’s had a great deal of experience assessing the physical and financial health of condos.
Here are Emer’s top seven tips to help ensure your decision to buy that condo is one you won’t regret.
1. Purchase a property that suits your needs and goals. Those will differ, Emer says, depending on whether you plan to live there for five years, 20 years, or to rent it to someone else.
2. Location, location, location. As with any real estate, it’s only as good as the neighbourhood. Is it convenient, safe, close to schools, transportation and services? It’s no bargain if no one wants it.
3. Convenience comes at a price. Condo owners pay monthly fees to maintain common elements, like the underground garages, hallways and lobbies and exercise facilities. There can be “special assessments” too. These are often substantial extra amounts that unit owners must pay for repairs or upgrades should the corporation not have sufficient reserve funds put aside to pay for them. Condominiums are run by an elected board of directors, Emer points out, and this board has the authority to impose such assessments if deemed necessary.
4. Yours, mine and ours. Know where the condo corporation’s financial responsibility ends and yours begins. Who pays for new windows if your unit needs them? If your townhouse has a backyard patio, where does your “exclusive use” end and the community’s begin? Can you build a fence or put in a rock garden?
5. Do your homework. Before a condo can be sold, it must have a “status certificate” that your lawyer can request. It will identify any liens against the property, current legal matters or upcoming increases in condo fees. Ask to see the financial statements. These will tell you if the corporation is financially sound, and if the unit owners are likely to face an increase in monthly maintenance fees or a special assessment. A reserve-fund study, which provides a 30-year projection of estimated repairs to the complex, will also follow the financial statements. Emer suggests you tour the property and speak to actual unit owners, too. Find out what issues they’re dealing with, how they make decisions and who the key players are.
6. Know the rules, and be prepared to abide by them. Condo by-laws will tell you if you can lease out your unit, use a barbeque or install a satellite dish on the outside wall. Even the out-facing colour of your drapes or window coverings is often regulated.
7. Condo life is community life. You’ll have to deal with different types of people, often in close proximity and in many different circumstances. Know what you’re prepared to live with, and for how long.
“Condo living is not for everyone,” Emer says. Don’t ignore concerns about the building, the lifestyle or the way the complex is managed. It’s far better to walk away than invest your money, time and energy in a situation that can bring you years of unhappiness.
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Contact the Jeffrey Team for more information - 416-388-1960
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Have you started your kids’ condo fund?
The housing market is red hot and new condos are constantly changing Toronto’s skyline. New research shows parents are helping finance purchases for kids, partly as an investment
Garry Marr, Financial Post
Here’s one way to tackle the red-hot Canadian housing market: Get someone to buy you a home.
That someone would be your parents. According to a new survey from TD Canada Trust, 10% of Canadians are considering buying a condominium for their adult children. A year ago, only 5% of parents thought about buying the kids a condo.
“It could be something that the parents are looking at as a long-term source of income, letting their children live it in for now,” says Chris Wisniewski, associate vice-president of real estate and secured lending with TD.
It could also be that parents know condominium prices, like detached homes, have climbed to unprecedented levels, making it difficult for adult children to come up with a minimum 5% down payment, let alone the 20% needed to avoid costly mortgage default insurance.
Toronto condo research firm Urbanation Inc. says the average existing condominium in the city sold for $331,000 in the first quarter of 2010. Based on an average $369-per-square-foot price, that’s a 900-square-foot unit. For a new one, prices averaged $443 per square foot in the first quarter, so about $400,000 for that same-sized condo.
Ms. Wisniewski says low interest rates are convincing parents to step up and buy their children homes. The condominium represents an attractive alternative to those parents because the costs are stable.
“They know what the maintenance costs will be,” she says. “[Parents] are thinking, ‘I’m not worried my children are too young to accept the responsibilities of home ownership if I set them up in an apartment. They don’t have to recognize the responsibilities of maintenance in an apartment.’ “
Parents might also see a condominium as a way to get their kids to start a family. The survey found 36% of Canadians are willing to raise families in a condo.
“One of the reasons for that is affordability,” says Ms. Wisniewski. “Where are the new condominiums being built? They are being integrated in really nice existing neighbourhoods with all the infrastructure and all the schools and amenities.”
Brian Johnston, president of developer Monarch Corp.’s Canadian division, says he doubts families will ever be integrated into the condominium stock, but does agrees with the premise that parents are helping to buy housing for their children. He says parents often want to keep children close to them so they’ll chip in for a condominium in a nearby neighbourhood.
“How do we know they’re helping out? They tell us when they are writing the cheques for the deposit,” Mr. Johnston says.
Mr. Johnston said when it comes to recent immigrants to Canada, there is “lots of help” from family members to get that first home. “Condominiums are not inexpensive and they’re going to need that help, particularly if the younger ones have not had time to build up their finances.”
The builder has his own children and, based on today’s prices, he figures he’s going to have to lend a helping hand. “I don’t expect them to be able to buy a condo…before they are 30. That is just part of the deal [for parents],” says Mr. Johnston.
It’s not like Baby Boomers don’t have the cash. There have been endless studies that suggest the Boomers are set to inherit billions of dollars in the coming years from their parents.
Craig Alexander, deputy chief economist with TD Bank Financial Group, says there is no hard data to suggest how much parents are helping children, but they certainly have the financial capacity to lend a hand.
Canadians have $1.5-trillion invested in stocks and mutual funds with $500-billion of that figure in capital gains.
“The generation before the Baby Boomers were big savers and, as a consequence, there is a very large income transfer going to take place over time,” says Mr. Alexander, adding it makes sense that some of that money is going to end up in housing and real estate.
For first-time buyers facing rising rates and increasing prices, the helping hand couldn’t come at a better time – just ahead of tighter mortgage financing rules. Most of them probably hope their folks go from “considering” buying a condo to actually doing it.
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Contact the Jeffrey Team for more information - 416-388-1960
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Torontonians appreciate condo living
Low maintenance, affordability, downtown living. Torontonians choose condos for lifestyle reasons. Sixty-three per cent of those who would consider purchasing or already own a condo, say that they would still purchase a condo or that their decision would be the same even if they had more money. Additionally, more than one-third of Torontonians thinking about buying a condo would consider raising a family in one (36%). This is according to the 4th TD Canada Trust Condo Poll which surveyed Canadians who would consider purchasing a condo.
“Torontonians continue to see the value in purchasing a condo, whether it is a place to call home for themselves or for their children,” says Chris Wisniewski, Associate Vice President, Real Estate and Secured Lending, TD Canada Trust. “Affordability and stable monthly expenses can make condos very attractive for both first-time buyers and investors.”
Why buy a condo?
People in Toronto and Montreal are most likely in the country to say that wanting to live downtown is the main reason for buying a condo (14% vs. 12% nationally). The biggest motivation for Toronto buyers, according to the TD Canada Trust Condo Poll, is the lower maintenance needs of condos versus homes (39%). Affordability is the second most popular reason for condo purchases (19%). Downsizing from a house to prepare for or during retirement is the next most popular reason (15%).
Is a condo a good investment?
Thirty-eight per cent of Torontonians surveyed would consider buying a condo that is not their primary residence. Compared to this time last year, the number who feel market conditions have improved for buying a condo as an investment has dropped (from 42% in 2009 to 32% in 2010). The number who would consider purchasing a condo as an asset to sell when condo prices increase, has dropped by one third (from 27% in 2009 to 18% in 2010).
“The results may reflect a growing perception among investors that the profitability of investment condo ownership will be reduced due to higher condo prices, expected interest rate hikes and the imminent increases in carrying costs due to HST,” says Georgia Stamatakos, Mobile Mortgage Specialist, Toronto, TD Canada Trust.
Torontonians know what they want to pay
For the fourth year in a row, the majority of Torontonians who would buy a condo (82%) say they would spend no more than $400,000 for a two bedroom condo. However, when it comes to condo fees, Torontonians are willing to pay more than the rest of the country. Twenty six per cent are willing to pay over $400 a month in condo fees versus 17% nationally.
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Contact the Jeffrey Team for more information - 416-388-1960
————————————————————————————————————–
Related posts:
- Want to buy a condo? The results of the 2009 TD Canada Trust Condo Poll...
- Condo buyers thinking green, says TD Canada Trust poll Canadians considering buying a condo as their primary residence are...
- Condos to remain an attractive option for many home buyers TD Canada Trust Canada’s condo markets have delivered a strong performance...
- Have you started your kids’ condo fund? The housing market is red hot and new condos are...
- TD sees housing correction in 2011 So far, any slowdown hasn't had a major impact on...
