Canada's Condominium Magazine
There’s a reason why people aspire to buy their first home, beyond lifestyle. Real estate, in nearly all cities and countries consistently trends upwards, despite swings and dips. As long as population increases, this trend is unavoidable. Then, of course, there’s the desire to live well.
“Get out of town” has lost its appeal for a lot of first-time home buyers; they remain focused on living close to Toronto’s urban centre despite the average price for a condo of $605,530 in the 416. Add a little commute time and the averages drop to $450,672 in the 905 for a condo. Going outside the 905 isn’t an option for most due to work situation.
Are people opting to “wait and see?” Market numbers tell us no — and for good reason. Despite any past dips in the market, the trend in real estate is consistently up (see Chart Average house prices corrected for inflation from CREA). As long as populations increase, this will continue. Looking at the trend since 1953, the trending line is consistently up, which is good news for owners, and people who are thinking of buying in. Even if there’s a dip, it will surge back. Here are the numbers:
Don’t buy not an option for most people
For most people, “don’t buy” isn’t an option when it comes to lifestyle choice in Toronto — if only because rent is just as expensive. Buying a home has always been the first step to future financial and family security — and that hasn’t changed; for the average home buyer, homes are still about security, equity and lifestyle. Preference and demand for condos, however, has skyrocketed as detached homes became unreachable in price for first-time buyers for most of the GTA. With short inventory, this high demand is fuelling price increases in condos.
It may be overly simplistic, but the choices, if you eliminate “don’t buy” from your list become:
Buy pre-construction (in town):
- somewhat lower cost per square foot (generally) — especially if you factor in needed renovations on resale condos
- probably superior amenities, and the peace-of-mind of buying new
- more time to save for downpayment while locking in price
- custom finishes often available
- highest resale value (all other factors being equal)
- may be able to avoid expense of car.
- have to wait to close (requires patience)
- have to pay rent or live with parents until closing.
Buy resale condos (in town):
- fast closing;
- you can visualize your home easily
- higher resale value than “out of town” (higher demand, short supply)
- may be able to avoid expense of a car.
- short inventory currently
- older condos possibly requiring renovations or maintenance
- older amenitieslikely higher maintenance fees (they take into account maintenance of older buildings).
- if you go far enough, often a lower price per square foot; bear in mind some nearby communities might actually have premium pricing (such as Markham, Richmondhill, and so on)
- if you go even further, a detached house might be possible
- depending on your employment, you are committing to permanent and increasingly longer commutes — degrading life style
- many studies attribute some health issues [diabetes, high blood pressure, etc.] with stressful morning and evening commutes in rush-hour [For example, refer to this feature>>]
- costly car maintenance and costs of commuting
- lower resale value
Wait to Buy:
- continue saving downpayment (assuming you have low rent or live with the parents)
- slim possibility of short-term dip in pricing for condos in future (increasingly unlikely given population demographics and supply issues; if it happens, it will be short-term.)
- prices likely higher when you enter the market (as compared to any of the above three options)
- any added “saving” time likely degraded by increasing market prices (putting aside short-term dips in the market)
- have to continue paying rent (or living with the parents) — possibly not leaving enough to save the downpayment.
- sizes of condos in future are likely to be smaller, given the scarcity of developable land.