Is Condo Living Right for You?
Looking to make a move? We weigh the pros and cons of condo living — and what you should know before jumping into the condominium market
You’ll meet all kinds of people at condominium open houses: first time buyers looking to get into the market, investors snapping up rental properties and, of course, baby boomers wanting to downsize their space and responsibilities.
Condos can be low-rise buildings, townhouses, freestanding houses, duplexes, triplexes or “mixed use” buildings, such as condos above offices or store fronts. They can be brand new, re-sell or conversions — that is, buildings that used to be apartments or factories turned into condos.
What makes condos different from freehold houses is that you own your unit but you also share ownership of the land, building and common areas. You share costs with fellow members of your condo association, and the board of directors or a property management company makes the big decisions.
There’s a lot of buzz about condos in the market right now, but are they a smart choice? We weigh the pros and cons.
The benefits of condo living
– Someone else handles the outside work. One of the biggest draws of condo ownership is freedom from maintenance you might not have the time, desire or ability to tackle — like shoveling snow, mowing the lawn or repairing outside structures. Your monthly condo fees cover these services.
– Many major costs are shared. By law, a portion of those condo fees goes into a reserve fund. When the property is well managed, this fund covers major repairs like replacing windows and roofing without additional costs to owners. Even when the reserve fund falls short, you’re not in it alone — a “special assessment” will be done and costs will be shared equally among owners.
– Lifestyle. If you prefer to live on one floor or in a one- or two-bedroom home, condos allow you to own your own space rather than rent. Common areas like pools and recreation rooms offer opportunities to socialize with neighbours. Many condo developments cater to specific groups — like young professionals, families and older adults.
– Amenities. Some condos offer benefits you won’t see in the average home or apartment building — like a theatre room, gym, swimming pool and party room.
– Customization. Unlike renting, you’re free to paint the walls, put up pictures and renovate.
– Price. Depending on where you live, some condos are more affordable than owning a freehold home — and a mortgage plus condo fees may be equivalent to rent.
– Location. If you’re craving a prime spot in a major city — like downtown Toronto — condos may be the only practical option. What you lose in space and higher condo fees, you gain with easy access to work, dining, activities, public transportation and other amenities.
– Security. Marketers say condos offer greater security than a free hold home or renting. For one thing, people are more likely to take better care of property they own, and some buildings offer a secure entrance or a doorman. You might feel safer with neighbours on either side, and worry less if you frequently travel.
The potential pitfalls
Any form of home ownership has its risks and limitations, and condos are no exception.
– Price. Depending on where you live, the purchase price of condos can exceed that of a freehold property. Moving to a condo doesn’t necessarily mean downsizing to a cheaper home — especially if you’re upsizing the luxury.
– Appreciation. If you’re treating your home as an investment, some sources like HomeBuyers.ca warn you may not see as high an increase in value on a condo over time as you would with a house. You may want to compare past real estate prices in your area to see how the numbers compare.
Also, unlike a freehold house, major repairs and renovations won’t necessarily raise the value when it comes time to sell, says former real estate journalist Jayne Huddleston. Even when the purchase price is lower than a house, the overall cost of ownership could be higher.
– Condo fees. Like other types of homeownership, the costs don’t disappear when you pay off your mortgage. Monthly condo fees can range from $200 to $600 depending on where you live, what’s included in the fees and what amenities you have. Perks like swimming pools and elevators can drive up the costs, and older buildings generally need more repairs and maintenance.
Like most expenses, condo fees increase over time and aren’t likely to go down again, warns Huddleston. High fees can make your home less appealing to future buyers and ultimately cut into your profit.
“If the condo fees have tripled, it’s hard to find a buyer that will take on a mortgage plus those fees,” says Huddleston. “Sellers may be forced to discount the sale price to get a buyer.”
– Special assessments. When your condo board goes over budget, the costs will be passed to you. For example, if your condo fees include water but your fellow condo owners collectively spent $3000 over the amount budgeted, you have to pay your equal share of the shortfall. When some owners use more of a common element than others, everyone pays.