Today we are going to take some time to talk about living in a condo vs. a house. What a better investment is a condo in Toronto vs. a freehold house in Toronto.
You will end up with overall more space inside and outside with a house. More privacy, more of a neighbourhood feel. You will be able to host bbq’s, host parties, usually have parking space(s) whether its on the street or in a driveway for multiple friends or family to park. You wont be sharing any costs, all the responsibility is on you to maintain the house and your own usage for utilities will determine your bills.
However there is a lot more up keep with a home. Shovel the driveway, cut the grass, clean the evestrophes, have someone watch the house when you go away, worry about your basement flooding when theres a huge storm. The list can go on and on.
With a condo most of these things you will never have to worry about. When you want to go away you just lock your door and leave. Theres cameras in most buildings, theres 24 hour security in most buildings, its very much a turn key situation and I feel a lot of people like that.
I do hear from time to time that someone doesnt want to buy a condo because of the maintenance fees. The average maintenance fee in toronto is around 65 cents a foot. Which will include most of your utilities but usually not hydro. So the bigger the place you have the higher your maintenance fee will be. If you were to pay $600 a year lets say in maintenance fees that would equate to about a 925sqft condo which now a days is on the large side. This would be the equivalent of paying $7200 a year in maintenance on a house.
Well just between water, waste and gas you will have already paid about one third of that. I have a guy that cuts my lawn and shovels my drive way that cuts into another one third. That leaves $2400 dollars for any other maintenance for the rest of the year. When the wind storm came I had shingles ripped off my roof, no condo to pay for that, it was up to me.
I havent even mentioned huge items like furnace replacement, window replacement, AC replacement, roof replacement. My point is optically the condo fees look like they would be more but at the end of the day its probably a very similar amount your going to pay with your house per year as you do with paying condo fees each month.
I personally like freehold homes more because I feel like I am more in control. With the condo boards they decide where money is allocated. Ultimately the the overall usage in the building for utilities can cause condo fees to go up or down. Also having issues with neighbours is more likely in a condo since your basically a box attached to other boxes. So things like noise or leaks from other units could affect you more easily.
In terms of investment the way I look at it is there are way more condos than homes. Builders are also building way more condo than homes. There is no more land and there wont be anymore land in Toronto. So you basically have no increase to inventory. However it gets a little bit worse than that. Builders have run out of commercial space so they are now ripping down blocks of homes which means the overall freehold supply isnt just paused its acting depleting!
We have a huge amount of immigration every year. Roughly 200,000 to 300,000 people that are coming here every year and majority of those people stay in and around Toronto. So with an increasing amount of people and a decreasing supply of freehold inventory theres only one way those prices can go.
Condos on the other hand have tens of thousands being built every year. While I do agree that even the condo supply is having trouble keeping up with the demand. The fact is they are getting a constant increase in inventory every year so that will for sure slow down appreciation for that product in the long run.
Some people will argue that more recently condos have done better than homes. However this is not the case downtown. The downtown and around downtown freehold home supply has continued to rise throughout all this government interference. The suburbs have had much more of a negative affect.
Overall it will come down to affordability. If you can afford to get a house I think its your better bet in terms of making the most off your investment. Of course homes in Toronto are very expensive. So even if you go with a condo instead of a house. You will still be in a great situation due to the supply problem that Toronto has.