In-depth comparison House vs. Condo in Toronto

In-depth comparison House vs. Condo in Toronto

Justo Team | July 24, 2019

Introduction

Given the recent growth in Toronto’s real estate market, it is no surprise that more people are looking into investing in the Toronto real estate market. With the increase in the number of condos being built and the recent drop in prices for houses in Toronto, the decision between buying a house vs. a condo is more challenging than ever. While at one point, the cost to purchase a condo in Toronto might have made buying a condo a clear choice for home buyers, this is no longer the case. With a drop in prices for houses, buyers who are looking to purchase real estate in Toronto have more choices than ever and are in a better position to decide whether buying a house or buying a condo is the best decision for them.

It is important to remember that for the purpose of this article, a house will be defined as a detached single-family home, which excludes townhouses and rowhouses from consideration and this comparison and analysis. For the purpose of this article, condo is short for condominium, which is defined by Dictionary.com as “an apartment house, office building, or other multiple-unit complex, the units of which are individually owned, each owner receiving a recordable deed to the individual unit purchased, including the right to sell, mortgage, etc., that unit and sharing in joint ownership of any common grounds, passageways, etc.” 

For those looking to buy a house or a condo in Toronto, there are many advantages to living in a house or condo in Toronto. If you live in either a house or a condo, you might be able to save money on rent if your monthly mortgage payment costs less than rent. You might be able to see a large return on your investment and put down roots in a given neighbourhood. However, homeownership whether you own a condo, or you own a house is the right choice for everyone. Some people might enjoy living in a house and be better suited to living in a house, while others might love condo living and find that it suits them better than living in a house. This article includes an in-depth comparison of homes vs. condos in Toronto with the pros and cons of each, the similarities and differences between houses and condos and things to think about for houses vs. condos. It is important that whether you decide to buy a condo or a house that you do whatever is best for you and your family. 

Related article: How to invest wisely in Toronto’s real estate?

Are you financially, emotionally, and mentally ready to become a homeowner if you are not already a homeowner? Are you willing to make the necessary commitments, financially and otherwise to become a homeowner? In other words, do you have the money to make this happen? Are you willing to commit to living in a certain neighbourhood or area for several years so you can hopefully see a return on your investment? 

Also, what are your goals with buying a house or condo? How long do you expect to live in the house or condo you are looking to purchase? Do you ever plan to rent out your home for rental income if you ever move into a new home? Are you ready and willing to deal with the challenges, setbacks, and difficulties that are associated with homeownership? It is important to remember that homeownership is not something that should be taken lightly and you should figure out your answers to these questions since they can help you determine whether or not you are ready to buy a home and become a homeowner if you are not already a homeowner.

Related article: Pros and Cons of Buying Homes in Downtown Toronto

Owning a House

During the later portion of 2018, house prices dropped in many areas in the City of Toronto, while the sales and the previously hot market for luxury houses have cooled off, a la 2017 home sales and prices. With changes in mortgages that took effect in 2018, home prices and sales increased before buyers would have to pass a stress test in order to qualify for a mortgage. Additionally, policies meant to make the City of Toronto’s housing stock more affordable since so many people are getting priced out of Toronto with increasing rents and home prices have impacted the availability of affordable housing.

At this point in time, prices for houses, whether they are single-family homes, detached houses, semi-detached houses, townhouses, etc. are at a point that the price for a house might be similar to the price for buying a condo in Toronto or in some cases comparable. In other words, the price to buy a house in Toronto might not be that much different from buying a condo. However, this is not always the case. While for some people, first-time homebuyers and others it might still be more affordable to buy a condo, this is a good time to consider buying a house. As sellers, even luxury home sales during the first half of 2019 in the City of Toronto were lower than they had been during 2017 and 2018.

This means that it could be a great time to consider investing in Toronto’s real estate market and see if you can afford to buy a house. The current slowdown in housing markets we are seeing in 2019, in places like the City of Toronto and Vancouver, which have been implementing policies to encourage affordable housing, could be great for buyers. You might be wondering how does a housing market slowdown in Vancouver and Toronto, and these new mortgage regulations help me as a buyer? How do I benefit from these regulations, especially if the Office of the Superintendent of Financial Institutions (OSFI)’s B-20 programme is making it harder for me to get a mortgage or qualify for a mortgage?

If there is a housing market slowdown in a really expensive housing market such as Toronto, this means that the market is no longer a seller’s market. All of the changes that have happened to cause this slowdown in Toronto, mean that there are now fewer homebuyers than there were before competing over a limited housing stock. This means that sellers might have to be more willing to negotiate with buyers in order to sell their homes than they would have been before when there might have been buyers lining up and competing to buy their homes. 

This housing market slowdown also is great for first-time homebuyers who are looking to enter the housing market. These lower prices combined with programmes with incentives for first-time homebuyers, that are meant to help low-income and middle-income homebuyers qualify for mortgages. This programme which launches sometime during September 2019, will help people with their down payments and help them to lower their monthly payments. Such programmes and the government urging the building of new housing stock in large cities can help first-time homebuyers looking to buy homes who might not be able to otherwise afford to buy a home.

Related article: The Ultimate Buyer’s Guide for Buying a House in Toronto

Pros for owning a house

There are many pros and advantages with buying a house and owning a house, especially when comparing owning a house vs. owning a townhouse or condo. Some of the benefits associated with owning a house are benefits that you can only take advantage of if you own a house since some of these benefits do not apply to you if you own a condo or townhouse. 

First, the expected Return on Your Investment (ROI) associated with buying a house is usually much greater than the expected ROI if you are buying a condo. You might wonder why this might be the case? The value of a house tends to appreciate and grow more than the value of a condo. This means that you are more likely to see a larger ROI if you buy a house vs. a condo. 

Second, as home prices historically have been increasing and home values have grown in Toronto, if you have the funds and are able to wait for several years, buying a house might be a great investment. If you can buy now during this housing market slowdown, while prices have decreased, you can ideally pay less than you might have paid for your house only a couple of years ago when the Toronto housing market was so hot, and the prices were so high. Buying a house can help you build a nest egg for your future. As your home appreciates in value, you will be able to capitalize on the equity that you have built up in your home.

Second, an additional benefit to buying a detached, standalone house, is that you will probably be able to have greater privacy living in a house than you would have to live in an apartment, townhouse, or a condo. You might experience more privacy living in a house since there is space between your neighbours’ homes and your home, you are not living above or below your neighbours. This means that it might be quieter to live in a house because if the walls are thin or you have noisy neighbours you might not hear them as much because you do not share any walls with them as you would living in a different type of home. Some people might feel ok with compromising on privacy, might not care as much or mind, but some people might enjoy having some distance between your house and the next house.

Third, another benefit of having your own house is that you might be able to have a garden and/or yard, with a patio or terrace or a porch, which can be a great place to entertain or hang out when the weather is nice. Having a house with a yard can be great for people with kids or pets such as dogs or cats who enjoy being outside or need to be outside. This can also be great if you want to have a swimming pool or a garden, where you can grow flowers or even grow your own food. Having a house means that you might have space and opportunities to do things at your home that you might not be able to do if you were not living in a house.

Finally, another benefit of having a house is that your monthly mortgage payment might be comparable to what you are already paying a month in rent if you are living in Toronto since rent and home prices are extremely high in the City of Toronto. And if you buy a house and assuming you are on time with your payments and nothing else changes i.e. imminent domain or something else, you will probably always have a place to come home to, this is not the case if you rent a home since your stay there will always be temporary or have an expiration date.

Related article: The Ultimate Pre-Construction House Buying Guide in Toronto

Cons of owning a house

Owning a house is not for those who lack patience since owning a home requires a long term financial commitment and you will need to be willing to live in the same home for a while in order to make this investment worth it. Owning a house tends to mean that you might have more belongings than a person who lives in an apartment or condo, which will mean when it comes time to sell your house or move, it will be harder to relocate if you own a house as opposed to a smaller home or rent an apartment.

While you might save money if your monthly mortgage payments cost less than rent, you might end up spending more money living in a house, with paying for maintenance, upkeep, and repairs. When you rent your landlord is responsible for this but when you own a house, you are in charge of all of this. This could be as simple as hiring someone to fix a leaky faucet or shovelling snow to having someone replacing your whole roof. 

On the one hand, you might have a fixed-rate mortgage, and this probably will not vary month-to-month, your mortgage payment might be higher than your rent payment. There are other risks associated with buying a home such as not seeing an ROI during the first few years of homeownership if your home does not appreciate in value or your home does not appreciate in value at all. And the costs associated with moving and buying a home are usually much higher than the costs associated with renting or leasing a home.

Related article: 5 Common Mistakes to Avoid for a First Time Home Buyer in Toronto

Things to think about when looking at houses

Buying a home is an important financial decision, it could end up being one of the most important financial decisions you may ever make. Therefore, you should do your due diligence and consider some of these things when deciding to look at homes in the City of Toronto.

First, the City of Toronto is an extremely large and densely populated city, that contains at least 140 different neighbourhoods. Yes, you read that correctly, the City of Toronto has at least 140 different neighbourhoods, this is just within the City of Toronto itself, which is why Toronto is known as the city of neighbourhoods. This means that there ideally is a neighbourhood for everyone’s tastes, budgets, etc.

When choosing where you want to live, you need to consider where you want to live, the type of setting you are looking for and the amenities. Do you want to be living in or near Toronto’s urban centre, or somewhere a bit further away, which still has restaurants, shops, and things to do? How important to you is that you are close to public transportation, work, school, and other activities? Do you want to be near nature, in an area more suited to younger single people or in an area that is more family-friendly? Do you want something that feels more suburban or rural or do you want to be somewhere that feels more urban? How long are you willing to spend commuting? How close do you need to be to major highways, roadways, and arteries? Do you want to live somewhere where you can walk and bike to things or do you prefer to drive?

Another important consideration is the type of neighbourhood and community you want to be living with? Do you want to live in an ethnically, culturally, racially, and socioeconomically heterogeneous neighbourhood? Or do you want to live in a community that is more racially and economically homogeneous and feels more insular? Do you want to live in a gentrifying or gentrified neighbourhood? Or do you want to live in a place that has not been gentrified? How do you feel about gentrification and urban revitalization?

Another consideration is your access and proximity to outdoor spaces. Do you want to live near or on Lake Ontario or one of the rivers in Toronto? If you are not able to live near Lake Ontario do you want to live in an area with close proximity to outdoor spaces i.e. parks, walking and bike paths? Do you have pets who you will be taking on walks who could benefit from living near outdoor spaces with walking paths?

Another thing you should consider is related to cost and what your most important needs are. You should consider how much you are able and willing to pay if you find your dream home and it costs more than you were hoping to pay. Are you willing to compromise on something price, amenities, location, house size, floor plan, etc. if you find your dream home?

Related article: Looking for a deal? Now’s the time!

Owning a Condo

While you may have only considered houses, you should definitely not sleep on condos since they are often the choice for first-time homebuyers in the City of Toronto, because entry-level condos still tend to cost less than houses in the City of Toronto. There are many benefits you can take advantage of living in a condo that you might not be able to take advantage of if you were living in a house. If you buy a condo, theoretically you can see a large return on your investment, and you might even save money if you live in an area that is closer to work and other activities. Other benefits that make condo ownership attractive include how buying a condo opens up a whole new group of neighbourhoods and all of the benefits that living closer to Toronto’s urban centre bring. However, living in a condo is not right for everyone. You should decide whether or not a condo living is the best choice for you and your family before you decide to purchase a condo.

Related article: The Ultimate Buyer’s Guide for Buying a Condo in Toronto

Pros for owning a condo

There are many advantages to purchasing a condo and condo living. One of the most notable advantages for condos is that you might be able to afford to live in a more desirable, expensive, and/or more centrally located neighbourhood if you buy a condo than if you were to buy a house. You might have an easier time finding a condo in a neighbourhood with great restaurants and a variety of amenities closer to Toronto’s urban centre that is within your budget, than if you were trying to find a single-family detached house in such a neighbourhood.

If you purchase a condo, it is possible that your monthly mortgage + condo fees might cost less than or be comparable to your rent or similar to renting an apartment in a desirable neighbourhood. In this case, it might make sense for you to own a condo instead of paying rent each month and not having anything to show for the rent you paid at the end of your lease. And depending on you and where you live, owning a condo still might be more economical than owning a detached single-family home or a townhouse.

It is important to remember that the closer you are to downtown Toronto, the more you will benefit from Toronto’s public transit system since you will have an easier time accessing public transit. If you live closer to downtown Toronto or in downtown Toronto, depending on you, your lifestyle, needs, etc. if you own a car, you might find that you might not need a car living in a condo closer to the city centre.

If you choose to give up your car or be careless you could potentially save thousands of dollars on gas, parking, insurance, and maintenance, while eliminating so many headaches related to parking and owning a car, and everything that you have to do if you own a car. This could be great for people who do not like driving or want to avoid driving, especially if you find a place that is within walking distance to grocery stores, stores, restaurants, public transportation, parks, and other amenities. Also, by not having a car, you could save up to $40,000 (thousand) CAD per year on paying for a parking space for your vehicle if you live in downtown Toronto.

Living in a condo means that you can enjoy some of the amenities that you could enjoy while renting an apartment while enjoying the benefits of homeownership. In other words, depending on which condo complex you choose to live in, you might be able to live at a place with access to a pool, fitness centre, party room, rooftop patio, sauna, etc. Living in a condo with these shared amenities and common spaces might help you to be more social than you might be if you were living in a single-family detached house and can be great if you want to befriend your neighbours or meet new people.

Also, if you live in a condo that has a gym, you will have no excuse for missing the gym because your complex has a gym. Depending on how well-equipped the gym is, you might even be able to forego paying a monthly gym membership and dues since there is a gym in your complex. 

Another great thing about condos is that the costs for maintaining the common areas, the building, and the complex are shared between residents. For example, when it snows or icy, you do not need to worry about shovelling snow or salting the walkways outside since your condo fees are meant to cover the cost of hiring someone to do this for you. This convenience factor makes condo living particularly attractive since you are only responsible for the maintenance and upkeep of your home, but you are not responsible or tasked with directly dealing with the upkeep of anything outside of your unit.

Another advantage of living in a condo is security. You can probably find a more secure building with a 24-hour doorman or concierge and/or controlled entrances. This is great for security-conscious people since having a doorman means that there will always be someone there to greet you when you are coming and going and can monitor others’ comings and goings. This can help protect you against theft and prevent other issues. If you are in a condo, more likely than not you will have neighbours living on both sides of your unit, living above you, and living below you. This is great if you travel frequently since your neighbours can be on the lookout while you are out of town. If you ever have packages your doorman or others can hold them for you until you arrive home, which means if you are ever ordering anything valuable or expensive, this can help ensure that your packages are not left in front of your house where they could be stolen by someone walking by your house.

Finally, condos are ideal for people looking to be homeowners and take advantage of all that homeownership has to offer such as owning your own home, having your own space, the tax incentives for homeowners qualify for, without some of the headaches associated with owning a house. Condo living can be great for people looking to downsize, for older people who do not want to deal with all of the headaches you confront when you own your own house. Condos can be great for people who want to invest in the real estate market who cannot otherwise afford to buy a full-sized house or who do not want to buy a house. While condo living can be great, it is important to note that condos are not for everyone and there are some cons and things you should keep in mind before deciding to buy and move into a condo.

Related article: The Ultimate Buyer’s Guide for Buying A Pre-Construction Condo in Toronto

Cons of owning a condo

Condo Fees, Assessments, Condo Association Dues, and more

A potential negative aspect of owning a condo is the fees that you will pay as a condo owner. These fees could include condo fees, special assessments, condo association fees, condo association dues, and more. Ideally, your condo fees should cover the maintenance and insurance for your complex and all of the other costs associated with maintaining your complex. While your condo fees cover everything outside of your unit, you will be responsible for paying and completing repairs for anything that breaks or needs to be repaired inside of your unit.

Another thing to remember is that condos increase over time since your condo fees are not a fixed rate. This means that while the monthly or quarterly condo fees help pay for the maintenance and upkeep for your complex, they do not cover unexpected damages that might occur. For example, if something unexpected happens, i.e. if there is a flood and it damages the lobby, you and the other owners in your building will be responsible for paying additional money to repair the damage caused by the flood. Or if a neighbour damages a common area, all of the condo owners in your complex will be assessed an additional fee to cover the cost of repairing the damage caused by your neighbour, even if you were not directly responsible for the damage that necessitated this repair and special assessment.

Ideally, a well-managed condo association capital reserve fund will ensure that repairs and maintenance for a condo complex will be completed without condo owners having to pay any additional fees. However, this is not always the case. There might be instances when your condo fees might not fully cover the full cost of maintaining your complex and the upkeep for your complex, as well as any unexpected costs which might come up. If you own a condo, you might find yourself in the following situation.

You might be at home minding your own business and someone knocks on the door. You go to answer the door and answer the door and find a board member from your condo association, who has come to inform you that you are responsible for paying a special assessment. This special assessment could be for a number of reasons. This also means that if your condo association goes over budget, faces any legal issues, or unexpected costs arise, you and everyone else in your condo association will be responsible for paying these fees. This situation could happen because in owning a condo, this means that you are responsible for paying these fees and special assessments whether you want to pay them or not. 

Another important consideration is that when you own a condo, you are jointly owning a property with people who you might know or would choose to jointly own property with. The people who you will be jointly owned property with will be always be changing for however long you own your condo. This means that you will only be able to control what happens within and inside of your unit, you may not have a say or choice when there are group decisions that impact the complex. This means that in the event that the other condo owners/condo association members in your complex want to change the lobby or do something else in a communal area, the other members will be deciding what happens and when this work is completed. In other words, if you do not like other people telling you what to do or making decisions that impact you, condo living might not be the best choice for you.

When you own a condo, when you finish paying off the mortgage for your condo, your condo fees and condo association dues will never be going away. This is not the case if you own a house, when you finish paying off a house, you will only be responsible for paying taxes, utilities, services, and for upkeep. Monthly condo fees can range anywhere from $300 to $900 or more per month, but this depends on where your condo is located, what is included and what is not included in your condo fees, and the amenities you have at your complex. Different amenities such as a swimming pool, fitness centre, sauna, rooftop deck, or elevators mean that you might have higher condo fees. While you might pay higher condo fees if you buy a condo in an older building since it’s not uncommon for older buildings to need more repairs and maintenance than newer buildings.

If you are selling your condo and your condo fees have doubled or tripled since you bought your condo, when the time comes to sell your condo, it might be more difficult for you to find a buyer who would be willing to take on a mortgage plus condo fees and utilities. If this were to happen to you this could mean that you might need to lower your asking price so you can find a buyer and risk your investment ending up as a loss for you so you can find a buyer for your unit.

Related article: GTA home buyers and sellers are overpaying by thousands

Condo Association Rules

Another important potential downside to consider is the condo association rules and bylaws. You might be reading this and wondering why this might be a downside? Condo association rules and bylaws are important since they dictate what you can and cannot do you inside your unit, as well as other things whether or not you are allowed to have a satellite dish, what types of pets you can have, how large any pets you have can be, and how many pets you can have. Not everyone will be willing to abide by the rules created by a condo association since they dictate what you can and cannot do as a condo owner. Other people might have issues living in such close proximity to others given that you cannot choose your neighbours when living in a condo. You might have great neighbours, but you might have neighbours who do things that bother you and cause issues for you, anything is possible. But this also applies if you are living in a house, but if you live in a detached house you will have some more distance between your home and your neighbours’ homes.

Possibility for Appreciation and the Return on your investment (ROI)

Another risk you face when you buy a condo is what happens if you are treating your condo as an investment. If you treat your condo as an investment you might not see as high of an increased return on your investment (ROI) over time with a condo as you might see with a house. If you are worried that this might be the case for you, you should do some research and find the sale prices for comparable condos in the area where you are looking to buy to see whether or not you might run into this. This is an important consideration given how many condos are being built in the City of Toronto and the demand for condos, especially luxury condos.

It is important to note that any major repairs or renovations you do for a house might lead to a higher sale price for a house this is not the same for a condo. Even if you do major renovations or repairs for a condo this might not necessarily correlate with an increase in value and higher sale price for your condo, when the time comes to sell your condo. 

You’re responsible for everything inside your unit

Another important thing to remember is as a condo owner, that you are responsible for everything inside your unit. This is usually not the case when you are renting. This means that if one of your appliances breaks such as your refrigerator, as a condo owner, you will be the only person responsible for paying to repair and/or repair it. While you can do things to your unit when you are a condo owner, such as paint your walls, customize your unit and do renovations when you own a condo, that you cannot do as a tenant when renting a place. As a condo owner, you will also be responsible for ensuring your unit and all of the contents inside of your unit. It is recommended that before you consider buying a condo you make sure you clearly understand the things you are responsible for and the things you are not responsible for.

While living in a condo might be great for some, there are some things you should take into consideration before you decide to commit to living in or buying a condo. If you do decide to buy a condo, you are not only buying a condo, unless your condo will be an income or rental property, you are making a commitment to make your home in a certain neighbourhood and be part of the community there.

Related article: Tips for Buying a Condo in Toronto

Questions you should be asking when looking at condos

Before you decide to commit to buying a condo or move into a condo, here is a set of questions that you should be asking. Finding the answers to these questions can help you to figure out whether or not making are you making the right choice to live in a certain condo community.

What are the condo association rules?

Before you decide whether or not living in a certain condo complex is the right choice for you, you will need to find out what the condo association’s rules are. This will help you to determine whether or not you can and are willing to abide by their rules. To be frank, you need to ask yourself if you have any issues with rules dictating different things such as what types of pets you are allowed to have, how many pets you are allowed to have, and anything restricting anything you do to your unit, including adding certain upgrades?

Before making an offer on a condo, you should make sure to get a copy of the Homeowners Association’s or Condo Association’s covenants, conditions, restrictions, and bylaws. When reviewing the Condo Association’s rules, covenants, restrictions, and bylaws you should make sure that you have a clear understanding of what the rules are and how they might impact you. This should help you to decide whether or not living in a certain condo community is the right choice for you and your family. You should also have a trusted attorney review these rules and go over them with you, this way you can ensure you clearly understand what the rules are and how they work.

Is there currently any additional work planned for the community (for example: adding more units, adding new amenities, changes to the common areas, etc.)?

This is an important question to ask, especially if you are buying a condo in the pre-construction phase or a newly built condo. If you are purchasing a pre-construction or newly built condo, this question can help you to ascertain what if any phases of the condo community have been completed, what phases have not been completed, how long more work might take and whether or not there are any plans for additional work.

Is the condo association currently involved in any legal disputes?

This is another important question to ask because it could serve as a potential indicator if there is any trouble within the condo association. If the condo association is involved in a legal dispute knowing this might help you find out if you can expect to pay costs in the future related to attorneys’ fees or legal fees.

How much money does the condo association charged with managing the complex have in reserve in their capital fund?

If you are considering moving into a condo complex, you should ask about how much money the condo association managing the complex has in their capital reserve fund. This is an important question to ask since the funds in the condo association’s capital reserve fund are generally used to cover the costs of additional expenses when they arise. Usually, this reserve fund is supposed to have at least 10 percent of the condo association’s annual revenue budget. Finding out the answer to this question is incredibly important since if the condo association in question does not have sufficient funds in their capital reserve fund this could mean that you might face an increased risk down the road for paying a special assessment. A special assessment is an additional fee that a condo association will have owners pay to cover the costs of capital improvements or other costs.

Who is responsible for fixing what?

You should find out who is responsible for fixing what, in other words, what things are your responsibility to fix and maintain and what things will the condo association be responsible for fixing and maintaining?

If you are living in a condo complex, who is in charge of managing the complex?

Before deciding on whether or not you want to live in a condo complex, you should find out whether or not there is a professional management company managing the complex. It might cost you more money initially to pay for a professional management company to manage your complex. However, enlisting the help of a professional management company might save you money in the long term because those who work at management companies who manage a lot of complexes may have greater power in negotiating the prices for things like maintenance services. This means you might be able to pay less money for different things such as landscaping.

Additional Questions to Ask/Information

Before you decide to buy a condo, if you will need a loan or financing from a bank to help finance your purchase you should consult your lender to find out which type of loan would be the best for you so you can purchase a home within a certain community. Your lender will have a set of questions about the complex, how many units are owner-occupied, what percentage of condo association fees are delinquent, etc.

If you are buying an existing condo as opposed to buying a pre-construction or newly built condo, you should speak with the people who are living in the complex. When speaking with residents who might end up being your neighbours, you might want to ask them what they enjoy about living in the complex, get their thoughts about the quality of maintenance and the condo association. This is a good time to learn about whether or not there are community activities they can recommend that you can participate in. 

Conversations with residents can be incredibly important and helpful as you decide to buy a condo within a condo community. Finding the answers to these questions before you decide to buy a home can help you to avoid some headaches down the road and help you as you decide whether or not a certain home is the best fit for you.

Related article: How to choose the right real estate agent when buying a home in Toronto?

House vs. Condo Similarities/Things in Common

There are many similarities and things that houses and condos have in common, the following is a list of some similarities and things houses and condos have in common. This list applies to the home buying process and homeownership.

Owning a house or condo allows you to be a homeowner and enjoy the benefits of homeownership

If you choose to buy a house or a condo, this can allow you to put down more permanent roots in the community. Also, there is a certain sense of pride associated with being a homeowner and owning your own home. Whether you own a house or a condo, you can still enjoy the benefits of homeownership.

Tax benefits for homeowners 

One benefit of homeownership is the possible tax benefits you can take advantage of as a homeowner. In some cases, it might be possible for you to deduct the interest from your mortgage and your property tax payments. This might be the case since the government tries to provide tax breaks to encourage homeownership. This is not usually the case for people who are renting.

Each month that you are paying your mortgage you are paying off your loan, you are getting closer to owning your home outright

Another benefit or advantage of buying a house or condo is that if you have a fixed-rate mortgage and condo fees you might have more predictable costs. This might be easier for budgeting and savings purposes, as opposed to renting and possibly having to worry about your landlord upping your rent if you are not in a place with rent control laws or having your landlord decides not to renew your lease when it is up, leaving you with no place to go. 

Additionally, each month that you pay your mortgage, you are getting one step closer to owning your home outright. And if you eventually reach the point when you can pay off your home, you might have lower monthly and yearly costs since you might only need to pay utilities and other services, maintenance, taxes and depending on where you live condo fees or assessments. When you have a mortgage, you will have something to show for it at the end, when you have a lease and may have spent a lot of money on rent, you will have nothing to show for all of the money you paid in rent at the end of your lease.

Also, if you are considering your future, if you own your home, in the event of your unexpected or untimely death, you can designate a person or people to inherit your property. This is usually not the case with a lease since you cannot usually pass a lease onto a person who is not on the lease or a family member or loved one who is not an occupant. 

Allows you to invest in the Toronto real estate market

Whether you decide to buy a house or condo, buying either of these will allow you to invest in the Toronto real estate market.

Mortgage payments, high costs associated with purchasing a home, difficulty getting a mortgage and risk for not seeing an ROI 

While there are many positives associated with buying a home and homeownership, there are some downsides and risks associated with homeownership and real estate. For example, while rent payments in the City of Toronto, your monthly mortgage payment while it might be fixed, might be even higher than your rent payment. And if you are buying a home, unless you can qualify for special programmes that support first-time home buyers, you usually need to be able to put down 20% to 35% of the home’s sale price or appraised value. And you will also need to be able to pay closing costs. Closing costs include attorneys’ fees, land transfer tax, other taxes, moving expenses, title transfer, home inspection, appraisal, and more. All of these costs make buying a home more expensive than renting.

Additionally, if you are buying a home, it is possible that the value of your home might not increase during the first few years that you own your home. In fact, usually during the first ten years of homeownership, the majority of your mortgage payment generally is going towards paying down the interest on your mortgage, instead of paying down the principal on your loan. It is also important to remember if you are ever planning on borrowing against the equity in your home to help you pay off or consolidate any debts, this could leave you ‘house poor’.

Additionally, it is not usually easy for people to qualify for a mortgage with favourable terms and interest rates to purchase a home. In order to qualify for a mortgage with favourable terms and interest rates you will need to show lenders that you have a steady source of income, solid employment history, a low debt-to-income ratio, a great credit score and credit history, sufficient funds available for a down payment, sufficient cash to cover the costs associated with moving and buying a home.

Another risk you face when you are purchasing a home, whether you are buying a house, condo, or a townhouse, this has the potential that you might not see a return on your investment. While trends that impacted the real estate market when you purchased your home meant that you might have paid an extremely high price for your home, there is no telling what the housing market might look like when the time comes to sell your home. You might not see the return on your investment that you expected or hoped to see, or this might result in a net loss. 

You can customize the inside of your home and do things that you would not be able to do when renting your home 

Whether you decide to buy a house or a condo, you will be able to customize your home in a manner that better reflects your tastes, suits your wants, and needs. While if you rent a home, you might be able to add furniture, hang pictures or paint the walls, chances are that you are not allowed to renovate or do any major construction. If you buy a house or condo you can usually do whatever you want inside your own house or condo.

Related article: Looking for a deal? Now’s the time!

House vs. Condo Differences

While houses and condos have many similarities and things in common, they also are distinct from the other. The following list includes some aspects of homeownership that distinguish owning a house versus owning a condo.

What happens when you finish paying off your mortgage for a house vs. a condo

When you own a house and when you finish paying off your mortgage, assuming you have other loans for your house, you will own your home outright. This means that you will only be responsible for paying for maintenance, upkeep, repairs, utilities, and services, you will have no longer a monthly mortgage payment. However, when you own your condo and pay off your mortgage, you own the condo outright as well, but you will always have condo fees, assessments, and condo association dues that never end. The only time that your condo fees will end is when you sell your condo.

Condo Association/Homeowners Association (HOA)

If you own a detached single-family home in a neighbourhood where there is no HOA, you can do whatever you like with your home. You will have no one to dictate what you can and cannot do to customize your home on the interior and exterior to better match your preferences, tastes, and needs. However, if you own a condo you are beholden to condo association and/or HOA rules, you can customize everything inside your unit, but you cannot customize anything outside of your unit.

Differences in ownership, maintenance, and maintenance costs for a House vs. a Condo

An important difference between owning a condo versus a standalone house or a townhouse is the ownership aspect. When you own a condo, you own your unit, and you also own a share in the ownership of the land where your condo building or complex is located, as well as a share in the common areas in your complex. This means that as a condo owner, you share the costs for upkeep and maintenance with the fellow condo owners in your condo association. This means that the Board of Directors for your condo association or the property management company that manages your complex is responsible for making important decisions about maintenance and upkeep for the building, the complex and the common areas in the complex.

As a condo owner, all of your maintenance costs for the common areas in your complex are shared with the other condo owners and they should be covered by your condo fees. So, if it snows and you live in a condo, you will not be charged with shovelling and salting the walkways, someone else will be charged with doing this. As a condo owner, you are responsible for insuring, maintaining and repairing things inside your unit. If you own a house, you are responsible for everything related to the house from maintenance and upkeep to repairing anything that breaks, to shovelling and salting your walkways when it snows and/or is icy.

When you own a standalone house, you own the dwelling, the house and the land it is located on. You might also co-own the house with another person but you and whoever else you own the house with is charged with maintaining the house and the lot it is on and making decisions about the house and its future. Ownership of a house is much more straightforward than owning a condo. If you own a house there is no condo association. If you live in specific housing development, there might be a Homeowners Association (HOA) who makes rules dictating things like what you can and cannot do to your home, what types of pets you can have and how many pets you can have. However, this is only applicable in certain cases since most standalone houses are not found in housing developments.

Distance between you and your neighbours in a house vs. a condo

If you are living in a detached single-family home further away from your neighbours and will maybe have more privacy than a person living in a condo. In contrast to living in a house, if you are living in a condo you will be living next door to your neighbours, who live beside you as well as possibly above you upstairs and below you, downstairs. Condos could be a good fit for people who like to know their neighbours because of their closer proximity to their neighbours.

Possibilities for customization in a house vs. a condo

If you own a detached single-family home in a neighbourhood where there is no HOA or condo association, you can do whatever you like inside and outside of your home. It tends to be easier to renovate a single-family home and you will probably see a larger return on your investment if you renovate a house, make major improvements and add upgrades when compared to a condo. If you own a condo you are beholden to condo association and/or HOA rules, you can customize everything inside your unit but nothing outside of your unit. It is harder to customize a condo when compared to a house.

The difference in the potential Return on Investment (ROI) for a house vs. a condo

As mentioned earlier, if you own a house you are more likely to see a higher potential return on your investment (ROI) for a house when it comes time to sell your house. This is especially true if you are looking to do any major upgrades, repairs, and/or renovations for a house. You simply probably are not going to see the same ROI for a condo that you would see for a house when it comes time to sell your condo. And condos might have potential higher ownership costs over time than houses because of condo fees, condo association dues, special assessments, etc.

The differences in convenience and amenities in a Condo vs. a House

While you might see a potential higher return on your investment (ROI) choosing to buy a house, living in a house might not be as convenient as living in a condo. For example, when you own your own house, you are responsible for completing and paying for all of the maintenance and upkeep yourself. This is not the case if you own a condo because the maintenance costs for the common areas for a condo complex or building are shared between residents which means you are only responsible for paying for anything inside of your unit. This could save you a lot of headache and frustration especially in Toronto where it snows, who doesn’t want to avoid shovelling snow whenever possible?

Also, depending on where you end up living, your condo complex could be full of amenities such as a pool, fitness centre, community area, common rooms, patio, pets’ area, bike storage, party rooms, parking, and more. And if you live in a condo closer to Toronto’s urban centre you might be closer to and have easier access for public transit and other amenities in neighbourhoods where condos are more popular or more commonly found.

Related article: Justo brokerage model includes lawyer, inspection fees

Conclusion

Hopefully, reading this guide has helped you gain some greater insight into what condo living is like in Toronto versus living in a house in Toronto, what is available, what makes them similar and makes them different. While there are risks whenever you decide to invest in real estate, ideally after reading this guide you will feel more ready to decide if you are ready to invest in real estate. As mentioned earlier, some people might prefer condo living and might feel better investing in a condo, while others might love all of the benefits that come with owning your own house. There are advantages and disadvantages, pros and cons for both, you should consider and decide for yourself whether or not living in a condo or a house is the right decision for you and your family. Every person’s wants, desires, needs, and tastes are different so you should use this guide as a jumping-off point as you consider investing in the Toronto real estate market. 

However, you should be prepared for the unexpected and be patient on your search if you do decide to look at homes after reading this guide. You might have started reading this guide thinking you preferred houses or condos more than the other and finished reading this comparison and analysis of house living vs. condo living and you might have changed your mind. Searching for homes, buying a home, moving, and homeownership can test your patience and be draining mentally, physically, and financially. 

But you make this process easier on yourself by doing your research and your due diligence and being flexible. You might find that your dream home might be different than you expected or imagined. If you do your research and are prepared this can only help you when it comes to deciding on which home is right for you and when you need to negotiate. Deciding where to live, buying a home, and moving are huge decisions that should never be taken lightly. 

Where you live can have a huge impact on your life, physical health, mental health, productivity, and family. If you love where you live and feel comfortable here, chances are that you might feel happier and be more productive. However, if you end up living somewhere that is not a good fit for you and/or your family, chances are that you will not be stuck here forever. And the worst-case scenario is if you are miserable, need a change or something else happens, you can always move. Moving is not the end of the world, people move all the time.

If you are buying a home, chances are that you might want to put down some more permanent roots in a certain neighbourhood or area, so you want to find a place, neighbourhood, and community that you like, works for you and your family, where you feel comfortable. Ultimately, you and your family are going to have to live with the consequences (whether they are positive, negative, or neutral) of your choice for a while. Take your time, be deliberate, be strategic, and choose wisely whatever you decide to do and wherever you decide to live. Consider your present and also your future, one of the only constants in life is change, so consider your present needs but always keep an eye looking to the future, do not forget to consider your future when looking at homes and deciding what set-up might be great for you now and hopefully in the years to come.

Related article: How to Find the Best Places to Live in Toronto?

Photo by Andre Boysen on Unsplash

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