Newer three bedroom condos have been in demand in Toronto for growing families, work from home couples and buyers who just want a more carefree lifestyle without ongoing chores and maintenance. It also offers a more affordable price point compared to freehold property.
When I was doing an open house over the weekend for a 3 bedroom condo, one couple who is currently living in a freehold home expressed that a condo space is not so bad, without having to deal with ongoing repairs, half finished renovation, crumbling walls from 100 year old structures, and unknown challenges of a retrofit. Sometimes even just hanging a picture on the wall of a Victorian home can open up a can of worms.
Although the steeper gains in freehold ownership may seem attractive to home buyers, they also command a higher price upon purchase and in most cases will require renovation to get it up to modern standards. If we look purely at historical numbers, Toronto real estate market have demonstrated that owning a freehold home in the long term offers steeper gains than a condominium when building home equity. This may seem to be the case when we look at the lastest housing figures from September 2014 released by Toronto Real Estate Board:
If we look purely look at the purchase price comparison for buyers looking for a freehold or condo turn key home in Toronto, a freehold townhome in the 416 area would start at the mid-$400k. Realistically this would get you a small two bedroom requiring renovation work in the Central areas. In that price range and same areas, it would get you a newer 2 bedroom condo requiring no updgrade work, but monthly maintenance fees. The average cost of maintenance fee per square foot is about $0.58 not including parking and locker. If you factor how much that would be for a 800sf space, this amounts to $0.58x 800=$464. The monthly fee which would include water, portion of building insurance, common element, and enjoyment of condo amenities.
With the historically low interest rates, it may appear it makes sense to enter the freehold market that has jumped in price signicantly in the past 7 years. However I always advise my buyers that, regardless of your ownership choice to buy freehold or condominium, place your needs in mind first. In the end it's a balance of making a good investment and well-being. Work with an experienced realtor to help you weigh out the pros and cons of each based on your objectives.