Condos are usually considered starter residences with studios, one bedrooms and lofts being most desired. Singles tend to be the predominant purchasing group. As you gather and collect things for life you also gain a spouse and child. Things constantly change.
We were expecting retirees to downsize and occupy smaller units, but they are embracing the housing they have and renovating to make their houses suitable for long term occupancy. This includes stair glider systems, wheelchair ramps and lifts at the front entrance plus other bath and lift aids. Walk in and Sit down Shower Conversions.
In a condo we agree to follow the Rules and Regulations. Declare Tenant Occupancy, you get to do what you want inside not on the outside; Pet Restrictions, No wild parties, no excessive noise, Parking in new buildings is often limited. TTC ridership is encouraged. Auto Sharing?
Many decisions and obligations are made for you so really you are making a lifestyle selection. You have the right to pay maintenance fees. The costs for heat and hydro, water and garbage removal, (a house's garbage pick up is included, condo's pay tipping) additional amenities like a concierge can easily run to 58 cents per square foot. The bigger the building, the better the sharing, but now you have more suites per floor in higher structures. Do you have a Rec center?
What will be the Future Values?
We have had an unprecedented run up in values that has continued unabated since 2000. (There was a blip in 2008 that recovered almost immediately in 2009). These exceptional growth years are expected to soften slightly going into 2014. (PDF from CMHC) As tenant demand decreases first prices will soften for rents, then prices will begin to adjust for unit costs. Toronto currently has 1.1% vacancy.
CMHC projects average values at $420 - $495 per square foot as sustainable and supported by the Toronto condo resale market. If you are buying at higher values you need to examine your addition amenities.
Annual appreciation on condos has been about 5 % per year on average. As buildings age they tend to stay within the rate of inflation for per square foot prices while maintenance fees continue to increase. Mandatory Reserve Fund studies are revisiting the minimum required contribution limits at 10% as inadequate. This is forcing many Condo Corporations to make the hard realistic choices they have evaded.
So what's my conclusion?
I could never afford to live in the location I have; at High Park over looking Lake Ontario, in a single detached home, (The Opening Video scene is shot from my condo window) If It was not in a condominium. The same very quickly applies to being in the downtown core. With larger units, 3 bedrooms plus den, does not appear to have sustained demand due to cost. IE 1.5 million plus.
If you want the lifestyle and location, it's great. As an investment, with the additional expense of upkeep, maintenance fees and services, condos may not deliver the promised return.
What do you think?