Toronto is no longer the easy city it used to be during the 70s, 80s, and 90s. There was once a time when an immigrant working as both a taxi driver and as a construction foreman was able to purchase their own home with ease whether it was a direct payment or via a mortgage.
Though it has earned the moniker ‘Condoville’ because the city’s urban planning policy mixed residential plots with apartment buildings. This helped curbed urban sprawl to an extent and led to the construction of condominium buildings in the city proper.
Numerous boroughs in Toronto have both homes and condos, and condos tend to be near apartments and lofts. When the city witnessed deindustrialization since the 2000s, many old factories became lofts and provided affluent residents a fancy accommodation.
Fast forward from that time to today; the prices have reached the ceiling with the rents becoming expensive and affordable options all lie outside the city in the suburbs. Also, a lot of residents are heading out to these suburbs as the city becomes more expensive and unbearable in terms of home rent and prices.
Are condominiums in Toronto the most sought-after residential property?
In all honesty, both homes and condos are the most sought-after residential properties among residents of Toronto. Both natives and immigrants of Toronto have preferred condos because of their proximity to the city core and the entertainment district. Moreover, numerous condos are located by Humber bay and the shores of Lake Ontario.
Toronto condos have by far fared much better than condos based in Los Angeles, Chicago, Vancouver, Mexico City, and Hong Kong. Yet, it is on the level of New York, London, Sydney, Tokyo, and Hong Kong. The best part about Toronto is that unlike the cities mentioned; Toronto is the least congested of them all.
Should residents buy a residential property in Toronto or take it on rent?
Toronto as a city is expensive, the cost of living is high, and the prices of homes are more expensive than that of New York, Seattle, Los Angeles, Dallas, Miami, Mexico City, Tokyo, Copenhagen, Bogota, Rio de Janeiro, and Barcelona.
Prospective buyers should hence ask themselves the following questions when they choose between buying a home or taking it on rent.
Can the real costs of purchasing a home be afforded by residents?
This is an important factor to consider, and it is equally to consider all the costs involved. In reality, there are more expenses than what residents can realize at first. On top of things like the down payment for a mortgage and the mortgage payments, there are things like land transfer tax, property tax, maintenance fees (for apartments, lofts, and condos), legal expenses, and vice versa.
At the first sight, renting a condo may cost less than owning one as the monthly rent payment will most likely be lower than any mortgage payment would be. At the moment, Toronto’s rentals are performing better than in previous years. It is also an affordable option in other ways.
Suppose there is a broken toilet in the condo. The resident simply needs to call in the landlord instead of spending their own money. If the condo’s windows need to be replaced, call the landlord. It comes out of the maintenance fees and the condo’s owner pays it.
However, it must be understood that the monthly costs for renters may probably be lower than that of a tenant; at the end of the day, it must be understood that those living on rent are paying off somebody else’s mortgage.
If renting is the right choice for them in the long run it may sound great. But for those who intend to purchase a property eventually, doing that sooner is a good idea. Condo prices at the moment are stable but a reduction in them is on the horizon. Despite the shocks in the market, property prices in Toronto have always risen as history indicates.
What are the long-term objectives of Torontonians looking to buy or rent a condo?
What will the next few years look like for residents? Will they stay in Toronto? Will they apply for the job in Italy, Argentina, Spain, or Tokyo? Or will they move to the United States for a lucrative job in Austin, Dallas, or Miami? In case of uncertainty in the residents near future, continuing to rent is a smart choice. Why? Because it is easier to end a lease than to sell a property.
For those who wish to remain in Toronto for the long term and are ready for owning a home, buying a condo is a worthwhile option. Even if they are going to live in it for just seven years or so and then plan on catching home in the suburbs, they will eventually reap the rewards of growing home equity and appreciating property values.
Are the residents carrying debt? If so, then how much?
Residents having more than one loan in their debt portfolio should pay them off first. Lenders observe closely the debt residents have, and the kind of debt they have when they consider giving them a mortgage.
A high amount of credit card debt and/or other high-interest borrowing sends up a red flag. Lenders want to be sure that residents can pay off their mortgage easily. If the credit card debt has 28 percent interest, then no lender will give that resident a mortgage.
How do residents feel about risk?
In both scenarios, the risk is present. Renters have a low financial risk because they are just carrying the rent. However, the risk to their stability is high because their ability to stay in that home is dependent on somebody else.
If the landlord decides to give the home to a family member or wants to sell it as per their desire; the one on rent is hence out of luck and without a home.
For prospective buyers, the situation is the opposite. Ownership of a home indicates stability. Even if the buyers are paying the mortgage, the only way they will be evicted is prolonged non-payment of the mortgage.
However, buying a home for the first time is a huge financial commitment because some people see it as a risk. Prices of condos are taking a plunge because of the pandemic and people are fearing that they might lose their money when they buy a condo. The low price is theoretically supposed to encourage buyers to buy but the aspect of equity takes a hit.
If residents examine the Greater Toronto Area (GTA) closely especially over these years; property values have been rising consistently, even with economic fluctuations present. Simple fact buyers must understand is that the home they purchase will be their long-term investment.
Prices may go up and down year to year and things are not as easy as they once were. But if residents wait for around a few years to a decade, their property will appreciate. Even if they sell the home for less than they bought for, they will still be able to gain much of their invested amount. Whereas, rent money is hard to recover.
How much freedom do residents wish to have with their homes?
For those who have an affinity for constantly decorating their home, renovating it, and evolving their home, the best for them is to own a home through a purchase (mortgage can help as well). When residents rent, they cannot do anything about the place as they need the landlord’s permission to do such and even if they get permission, they may not alter the space completely.
Also, costly stuff like adding in laminate floors or replacing fixtures is like burning money on another person’s property. Even if the renters get the enjoyment from the upgrade, they will not get the money invested back in their pocket.
When residents own a home, they are the boss of their setup and can alter the home their way. They can paint the bedroom grey, add a Batman wallpaper, theme it according to Tony Stark’s garage lab, and for the kitchen, they can put in new cupboards. This investment is worth the value of their home.
Whenever residents feel like buying a home after they have obtained the necessary amount of money, they should always consult their realtor or real estate firm to obtain info about buying a condo versus buying a home, understanding bidding wars, and navigating through the whole process.