In-depth comparison Townhouse vs. Condo in Toronto
With the recent growth in Toronto’s real estate market and population growth in Toronto, with more people looking to move to and moving to Toronto each year, it’s a great time to invest in real estate in Toronto. Now with the slowdown happening in Toronto’s housing market and relative cooling off from Toronto’s housing market’s peak during 2017, with changes in mortgage regulations and interest rates, this means that the real estate market in Toronto has balanced out a bit. While during the past couple of years, the housing market in Toronto was considered to be more of a seller’s market with buyers getting into bidding wars and competing to buy houses, this is no longer happening as much.
Data from home sales in Toronto have shown that sales have dropped during the beginning of 2019, fewer houses are being sold when compared to comparable home sales in past years such as 2017. This applies to more entry-level or starter condos or homes in Toronto as well as luxury home sales in Toronto. This means it is a great time if you are a first-time homebuyer considering investing in Toronto’s real estate market since sellers might be more willing to negotiate with buyers so they can sell their homes.
Related article: Looking for a deal? Now’s the time!
While in the past sellers in Toronto might have had buyers lining up to buy their home, this might no longer be the case as much, which makes it easier for first-time homeowners looking to invest in Toronto real estate. Prices are still high but not as high and there is not as much competition as there has been during previous years. Additionally, if you are a first-time homebuyer looking to buy in Toronto reading this article there is good news for you too.
This housing market slowdown is great for first-time homebuyers who are trying to enter the market since these lower prices might make it easier for you to find a home with your budget. And a new programme designed to help low-income and middle-income first-time homebuyers purchase their first home from Canada’s federal government beginning sometime during September 2019, will make it easier to buy a home. This programme is meant to help first-time homebuyers with their down payments so they can have a lower monthly mortgage payment, can make it easier for those who have dreamed of buying a home in Toronto, but who might not otherwise able to afford to buy a home or have the funds to make a down payment that is 20% to 35% of the value of a home or of its sale price. Programmes like this combined with Toronto’s local government’s that are urging developers to build more affordable homes to add to their limited stock of affordable housing can help homebuyers who are looking to buy a home in Toronto but without such programmes might not otherwise be able to afford to purchase a home in the City of Toronto.
There are many advantages associated with buying and living in a condo or townhouse in Toronto. Whether you decide to purchase a townhouse or condo in Toronto, you might be able to save money on rent with your monthly mortgage since your monthly mortgage payment might cost less than or be almost comparable to the high rent prices in Toronto. If you choose to invest in real estate in Toronto, you will be able to put down more permanent roots in a certain neighbourhood and become a part of the community. Additionally, given the growth in the Toronto real estate market, you might be able to see a large return on your investment (ROI).
Should I buy a house or a condo?
Justo agents will help you decide.
Homeownership might not be ideal for everyone and not everyone is suited to condo living or living in a townhouse. Some people might love the amenities and convenience associated with condo living and prefer this to live in a townhouse. While others might want some of the amenities associated with condo ownership and purchase a condo townhouse but want to have some of the benefits of owning a townhouse such as having a yard or garden, garage, more space, and more privacy. This article contains an in-depth analysis and comparison of townhouses vs. condos in Toronto, which includes an explainer on the differences between different types of townhouses, the pros and cons of condo ownership and the pros and cons of owning a townhouse. This article also includes sections dealing with the things to think about and questions you should be asking if you are looking at townhouses and condos.
However, if you are looking at buying a home whether that is a house, townhouse, condo, etc. you need to consider what will be best for you and your family. This guide should serve as a jumping-off point if you are considering buying a condo or townhouse in Toronto. What might be the best choice for you might not be the best choice for another person?
Related article: 5 Common Mistakes to Avoid for a First Time Home Buyer in Toronto
What are townhouses?
For this article, townhouses will be defined as single-family dwellings that have at least two floors and share a wall with another house. Townhouses, unlike duplexes, triplexes, or fourplexes, each townhouse is individually owned. While the terms row house and townhouse might be used interchangeably, they represent two slightly different styles of houses and housing.
What is the difference between townhouses and row houses?
Row houses are arranged differently than townhouses, they are built to be more compact than townhouses and are built in such a way that they are all lined up in a row, hence the name row houses. And townhouses are built in a different manner from row houses.
Row houses are popular in certain urban areas since row houses are a more efficient way to build houses that are a bit for a city’s infrastructure than other types of houses. Row houses tend to be built within a short distance to offices, shops, restaurants, and other amenities. While row houses might be beautiful and be more centrally located than townhouses in certain areas, row houses might not always include space for garages, common areas or elevators. Row houses do not tend to have the amenities that apartment or condo complexes tend to provide residents. Row houses are all individually owned and tend to be built with a common façade and in the same style as the other row houses on the block.
While you will find both row houses and townhouses in the City of Toronto, you might be more likely to find a greater number of townhouses and townhouse developments in the suburbs and the Greater Toronto Area (GTA). When looking at townhouses, especially townhouses in planned townhouse developments you are more likely to find townhouses that have different layouts and that are grouped together to create a development. You are more likely to find a homeowner association (HOA) in a townhouse develop with townhouse condos.
Townhouses are also distinct from row houses since they share a common wall with the neighbouring townhouses on each side of the home. The size of a townhouse is usually somewhere between two to four storeys high. Townhouses are different than rowhouses since they might not always be built to fit in with the amenities the city surrounding it offers. You are more likely to have a garage with a townhouse and if you are in a townhouse development, you might even have some shared community space with the other residents.
Both townhouses and row houses might be slightly smaller or larger than nearby single-family detached homes in the area. Depending on where you are looking to buy, townhouses and row houses might be as expensive or even more expensive than some traditional, single-family detached homes. You might find this to be the case if you are comparing the prices for row houses and townhouses with the prices of detached single-family houses in some of Toronto’s most desirable neighbourhoods.
Related article: Tips for Buying a Condo in Toronto
What are condos?
For this article, a condo is short for a condominium. A condominium according to Dictionary.com is “an apartment house, office building, or another 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.”
There are many benefits associated with townhouses. Townhouses can be a great compromise between buying and living in a detached single-family house and a condo. Townhouses might cost less than a detached single-family house, but more than a condo. However, townhouses tend to be more expensive than condos and provide more space than you might find in a condo. If you own a townhouse, you might be able to take advantage of the yard, you might have more parking if you own a townhouse, and maybe even a garage. A townhouse can be great for people looking for more space than a condo could provide with more green space than a condo but without all of the upkeep and costs associated with buying and owning a larger, more traditional single-family home.
A townhouse can be ideal for people looking to downsize from a larger single-family home but who want more space than a condo provides. Townhouses can be great if you have pets and kids but cannot afford to buy or want to buy a single-family home. Depending on where you are located, a townhouse might be more centrally located and be more convenient than buying and living in a more traditional, detached single-family house.
However, it is important to remember that there are two different two types of townhouses. There is a condo townhouse, which is more similar to owning a condo with the benefits it offers and how ownership works. And there is a freehold townhouse which is closer to a row house and living in a freehold townhouse more closely resembles living in a detached single-family house.
What is a condo townhouse?
A condo townhouse means that you are usually living in a planned condo community that is run by a condo or townhouse corporation or board and governed by a board of directors. This makes condo townhouses similar to living in a condo complex. All of the amenities and exteriors when you live in a condo townhouse are considered shared common areas. This means that you only own the inside of your unit if you choose to live in a condo townhouse and the exterior of your unit and common areas are maintained by the condo association. This is similar to living in a traditional condo since you will pay monthly fees to cover the cost of maintaining the exterior of your unit and the shared common areas.
You will tend to find condo townhouses in planned townhouse developments, and you can also find groups of townhouse condos in centrally located and popular downtown neighbourhoods in Toronto such as Liberty Village. Many of the things that apply to live in a high rise condo also apply to live in a condo townhouse. If you live in a condo townhouse a Homeowners Association (HOA) will make rules that govern what you can and cannot do outside of your unit, what types of pets you can have, how many pets, you can have, etc. You will only be responsible for maintaining, repairing, and ensuring everything inside of your unit if you live in a condo townhouse, much like you would if you live in a regular condo.
Usually, condo townhouses are smaller than freehold townhouses. Condo townhouses typically range in size from one bedroom to three bedrooms. Depending on what condo townhouse community you are in, the way townhouse condos are configured will vary. Condo townhouses in Toronto tend to come stacked or are built in a row.
With stacked condo townhouse configurations, one unit will be designated as a single storey and another unit “stacked” on top of the first unit, like a small apartment. This means that residents will have neighbours living both above and on both sides of them. However, if you are living in a stacked condo townhouse, you might have a more connected floor plan without stairs that occupy valuable interior square footage.
Row condo townhouses in contrast to stacked condo townhouses are built and configured in a way that more closely resembles a traditional freehold townhouse. Each dwelling in a cluster of condo townhouse configured into rows will be between two to three storeys. Each unit will be attached to their neighbours’ units on each side of their unit. However, if you are living in a row condo townhouse you will not have any neighbours living above or below you. Condo townhouses configured into rows tend to be larger than stacked condo townhouses, and they have rooftop patios or terraces.
If you live in a condo townhouse you might have a small yard or garden, one that is smaller than yards or gardens found at traditional freehold townhouses, but you might have access to amenities such as a shared swimming pool for residents, fitness centre, or community garden.
It is important to note that when you own a condo townhouse you will only own the inside of the unit you will not own the land the unit is on. The ownership for condo townhouses is different from freehold townhouses where you own the whole house itself and the land it is on.
Pros for buying and living in a condo townhouse
Buying a condo townhouse might be the best option for people who want to own an actual house instead of a condo, but who want to avoid doing or worrying about the outdoor maintenance and upkeep associated with owning a house. For example, if you buy a condo townhouse, your Homeowners Association (HOA) fees should cover the cost of all of your outdoor maintenance and upkeep including gardening, maintaining your home’s exterior, cutting the lawn, landscaping, shovelling snow, salting walkways, etc. This can mean that the money you are paying in HOA fees that are paying for maintenance and upkeep for your house, can help save you money, which might make this a more affordable option when compared to living in a freehold condo.
Living in a condo townhouse, you will also have a Homeowners Association (HOA) and board to represent you and your interests who manage the complex much like you would if you were living in a conventional condo. Having a Homeowners Association (HOA) board can help you meet your neighbours. If you are one of those people who worries about their neighbours doing things to their homes that might impact the value of their homes, a Homeowners Association (HOA) for a condo townhouse complex can help to ensure that this will not happen since every unit has to be up to code.
Condo townhouses can be great for people who want the benefits and amenities that are associated with living in a condo and to have more space and their own house. A condo townhouse can be an excellent hybrid option for people who want to combine condo living and townhouse living, experiencing the best of both worlds.
Additionally, given that condo townhouses tend to be built centrally located neighbourhoods and tend to be less expensive than freehold townhouses make them a great fit for people who want something in between a house and a condo. There is also a greater number and inventory of condo townhouses in the City of Toronto when compared to freehold townhouses. Condo townhouses also tend to be less expensive to purchase and might cost less to maintain then freehold townhouses.
The cons of buying and living in a condo townhouse
While some people might prefer living with rules that regulate what homes in their neighbourhood look like so they are all uniform, others might not enjoy being told what they can and cannot do to the exterior to their homes, how they can landscape their property, what colour their home can be painted, etc. While this can help ensure that one of your neighbours does not paint their house a bright magenta colour or leave trash in front of their home, this also might mean that you are not allowed to decorate your home for the holidays or keep a grill at your home.
Another possible downside for condo townhouses is that you have to pay condo/HOA fees. You might have little to no say in how your HomeownersAssociation or Condo board spends your condo fees. If there are any unexpected damages, you might have to pay a special assessment to cover the cost of repairing this damage. Many of these cons are the same that you would face if you owned a condo and were dealing with a condo association.
Additionally, condo townhouses tend to be smaller than freehold townhouses with a smaller interior and much smaller garden/yard. If you have a condo townhouse you will be restricted with what you can do to your unit and to the outside of your unit. It tends to be more difficult to find newly built, move-in ready, condo townhouses. Much of the condo townhomes available were built decades ago and you might need to renovate them to ensure that they are updated.
What is a freehold townhouse?
A freehold townhouse is also commonly referred to as a rowhouse. A freehold townhouse provides owners much greater autonomy since when you own a freehold townhouse you own your whole house and the land it sits on. A freehold townhouse is physically attached to the townhouses on either side of it. This means that owning a freehold townhouse is much more like owning your own house, you are solely responsible for repairs, maintenance, and upkeep associated with your house.
This means that each month you will pay your utilities, services, and your mortgage you will not be responsible for paying condo association fees or Homeowners Association (HOA) fees. There is no condo association or Homeowners Association (HOA) there to dictate what you cannot and cannot do with your home. This makes a freehold townhouse a much better fit for those who are more independent or do not want to have a Homeowners Association (HOA) or a condo association’s board of directors telling them what they can and cannot do with their home. When you own a freehold townhouse, you are in control of everything inside and outside of your home.
The pros of buying and owning a freehold townhouse
One of arguably the greatest advantages of freehold townhouses is that you are in control of your home and what happens to it. This means you can do whatever you want if you want to make repairs, have upgrades done, and maintain your unit, there will be no condo board telling you what you can and cannot do. And you will not pay monthly maintenance or condo fees to a Homeowners Association, which could save you money since you will be the one who decides how and when to do maintenance and repairs and add upgrades.
Another advantage of freehold townhouses is that they tend to be larger than condo townhouses, with larger yards/gardens. Freehold townhouses tend to have at least three bedrooms and many of them have more than three bedrooms. When you own a freehold townhouse you also own the land the home is built on, as well as any space in the front yard or garden, and back yard that is within the property line. This makes owning a freehold townhouse much more like owning a conventional detached single-family house.
Freehold townhouses are usually in greater demand than condo townhouses since there are fewer of them in the City of Toronto compared to the inventory of condo townhouses in the City of Toronto. While you will pay more to purchase a freehold townhouse, you can also expect to see a higher return on your investment (ROI) when the time comes for you to sell your home. And freehold townhouses tend to appreciate in value faster than condo townhouses. And they might sell more quickly than condo townhouses since they on average spend fewer days on the market than condo townhouses.
Cons of owning and living in a freehold townhouse
When you own a freehold townhouse, you are solely responsible for ensuring for performing repairs, maintaining your home, and upkeep your home, no one else will be paying for you to do this. If you have a fire or need to replace your home’s roof no one else will be covering or sharing the cost for this with you. There is no capital reserve fund from your condo association or your Homeowners Association to help you in these instances. When it snows or icy, you will be the only person responsible for shovelling and salting the walkways. While you can decorate and customize your home to specifications this means that your neighbours can do the same thing. There will be no Homeowners Association in the event that one of your neighbours paints their home magenta or leaves trash in your yard or does something else that negatively impacts the value of your house.
Buying a freehold townhouse and the autonomy that comes with a freehold townhouse will cost you more. You will probably need to save more money for a larger down payment for a freehold townhouse, more money than you might need for a down payment for a condo or a condo townhouse. It is recommended that you maintain an emergency fund for home repairs and maintenance for a freehold townhouse.
Adding an addition to a freehold townhouse might be more difficult for a freehold townhouse than it would be for a detached single-family home because your neighbours’ homes are attached to your home. However, you can still add updates and upgrades or remove interior walls.
Related article: Pros and Cons of Buying Homes in Downtown Toronto
Cons of owning a townhouse and townhouse living
A potential major downside of townhouses for some people is the way that many townhouses are built since they tend to be taller than many conventional, single-family detached homes with your living space spread across multiple floors. This means that townhouses tend to extend back further and be taller than most detached homes. This means that a townhouse with multiple storeys might not be the best fit for people who need or want to live in a home where everything is one floor, i.e. people with chronic illness, people with certain disabilities, who have limited mobility, trouble going up and downstairs, older people, etc. Multi-storey townhomes might not be the best choice for people with pets or small children given that your living space is spread out over several floors.
While you might dream living in a multi-storey townhouse or row house, if you need to live in a single storey house your best option might be installing a chair lift of elevator. Installing an elevator or chair left could be time-consuming, costly, and headache-inducing.
Another potential downside for living in a condo townhouse or living in a development with the townhouse is the Homeowners Association. Not everyone wants to deal with a Homeowners Association, pay HOA fees or condo fees. And there is less privacy living in a townhouse than you might have if you lived in a detached house.
Things to keep in mind when you are buying a townhouse
If you are interested in living in and/or investing a townhouse, whether this is a freehold townhouse or a condo townhouse, there are a couple of things that you should keep in mind. Privacy concerns and the “party wall” and easement rights with your neighbours’ homes.
Privacy Concerns, and the “Party Wall”
An important consideration is how townhouses, whether they are condo townhouses or freehold townhouses are usually designed. Townhouses usually share a common wall with their neighbours’ homes. However, freehold townhouses and condo townhouses built in rows do not share ceilings or floors with their neighbours’ homes like people living in stacked condo townhouses, condos and apartments do. Instead, those who live in townhouses tend to share what is commonly referred to as a “party wall” instead of having a side yard.
A “party wall” is a shared wall that runs the length of a townhouse between homes. People who live in townhouses or rooftops typically also share a stretch of a rooftop with the adjacent townhouses or row houses. This means that living in a freehold townhouse or townhouse configured in rows means that you might have more privacy living here than you did if you lived in a condo, you would probably have more privacy if you lived in a detached house.
This shared “party wall” and lack of privacy with townhouses and row houses might bother some people who might seek more privacy, while others might not be bothered by this shared party wall. Another important consideration if you are looking to buy a townhouse is if you might want to do something with your home in the future, as it relates to your neighbours’ easement rights.
Another important consideration for people looking to invest in townhouses is easement rights. Easements rights are the basic agreements that owners of townhouses and row houses are bound to. Owners of detached houses are not bound to easement rights. Easement rights mean that if you own a townhouse in the middle of a row of townhouses you are not able to raze the house and build a house more suited to your preferences. Townhouse or row house owners are not allowed to do this because this would violate their neighbours’ easement rights.
Easement rights mean that homeowners only own their half of the party wall, they do not own their neighbours’ half of the party wall. This means that homeowners who own their half of the party wall have certain rights. One of their rights as part-owner of the party wall is to prevent any demolition that might damage the structural integrity of their portion of the party wall. This same rule about easements usually applies to other things including fences and driveways.
A townhouse might not be a great fit for you if you are planning on doing any major construction in the future to expand your home, that would change your home’s shape or form because your neighbours’ easement rights could prevent you from doing such things. In this situation, you would be better off purchasing a detached house, where you could raze the existing home and build another one without any issues assuming you received the proper permits and permissions before beginning construction. Living in a townhouse means that you will have more obstacles preventing you from customizing your house i.e. expanding your house or renovating your home because of your neighbours’ easement rights. If you are ok with the possibility that you cannot do as much work on your house than a townhouse could be a good fit for you.
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A condo can be great for a variety of people, people looking to downsize or own their own home but who might not otherwise be able to afford a townhouse or detached house. Buying a condo allows you to benefit the benefits of homeownership but at a lower entry price than buying a detached house. For this reason, condos are popular with first-time homebuyers in the City of Toronto. If you are lucky, you might be able to see a large return on your investment and might be able to save money on transportation and rent if you find a condo whose monthly mortgage payment plus condo fees is less than the high price of rent in Toronto. While there are many benefits associated with condo ownership and condo living, condo living is not right for everyone. You need to determine whether or not buying a condo is the right choice for you and your family.
Pros for buying and owning a condo in Toronto
There are many benefits associated with condo living. If you do decide to buy a condo you might be able to afford to live in a more desirable and/or centrally located neighbourhood than you might be able to otherwise because condos usually cost less than houses and townhouses. You might be able to find a condo within your budget that is close to some of Toronto’s excellent restaurants and amenities as opposed to a townhouse or detached house.
If you decide to buy a condo, your monthly mortgage payment + condo fees might end up costing the same or less than a monthly rent payment in the City of Toronto given how high rent is in the City of Toronto. If this is the case, you might benefit from owning a condo since at the end of your mortgage you will have something to show for all of the money you have spent. This is not the case when you are at the end of your lease, you might have paid a lot of money and have nothing to show for all of the money that you have paid. Depending on where you are looking to buy, it might be more economical for you to own a condo instead of owning a townhouse or detached house.
If you decide to purchase a condo in downtown Toronto or in a neighbourhood near downtown Toronto, the more you will benefit from having easy access to Toronto’s public transit system. Depending on where you live and lifestyle, this means that you could even give up your car and save thousands of dollars on gas, maintenance, car payments, insurance, parking, registration. And if you decide to not have a car, you could also save yourself time and headaches.
Living in a condo means that you might be able to enjoy some of the amenities and benefits associated with renting an apartment while enjoying all of the benefits that homeownership has to offer. If you bought a condo you could move into a place with a fitness centre, pool, party room, rooftop deck, etc. And since you would be living in closer proximity to your neighbours living in a condo this could help you to be more social and meet more of your neighbours.
Another benefit of condo living is that the costs for maintaining the building, common areas, and the complex are shared between residents and are usually covered by your condo fees. This means that if it snows, someone else will be responsible for shovelling the walkway when it snows and de-icing the walkways when it is icy. This makes condo living incredibly convenient since you are only responsible for maintaining everything inside of your unit, your condo fees will cover the cost of maintaining and repairing anything outside of your unit.
The condo is living is excellent for security-conscious people since you can probably find a secure building with a doorman and secured entrances. You would not find this if you were living in a detached house. And you will probably have neighbours living on both sides of you so if you travel frequently you can sleep easier at night knowing that someone can watch your house while you are out of town. You will also have people who can pick up your packages when you have things delivered. This is great since if you get anything delivered it would not be left on the street in front of your house where it could be stolen.
Should I buy a house or a condo?
Justo agents will help you decide.
Condos can be great for people who want to be homeowners and take advantage of all that homeownership has to offer, including owning your own home, having your own space, the tax incentives, and more with fewer headaches associated with owning a house. Condo living can be great for anyone looking to downsize or people who want to live somewhere with minimal headaches and maintenance. Condos can allow people who dream of becoming homeowners but could not otherwise afford to buy a house the opportunity to invest in the real estate market and become homeowners. Condo living can be an excellent choice for many people, there are some potential downsides to condo living and condo ownership that you should be aware of.
Related article: In-depth comparison House vs. Condo in Toronto
Cons of owning a condo and condo life
Condo fees, special assessments, condo association dues, and more
A potential disadvantage to condo ownership is condo fees, condo association dues, and special assessments that you will be responsible for paying. Your condo fees should cover the cost of maintenance, insurance, upkeep, and everything outside of your unit. In the event that you need to repair something that breaks inside of your unit, perform upgrades or maintenance this will be your responsibility. You will need to pay and do these repairs and maintenance yourself.
Also, condo fees are not fixed, they increase over time. Your monthly condo fees pay for routine maintenance and upkeep at your complex, they will not cover you in the event that unexpected damage occurs. As a condo owner, you will be responsible for paying for the costs to repair any unexpected damages even if you yourself had no part in causing these damages, even if another condo owner or someone or something else caused these damages.
A well-managed condo association capital reserve fund should ensure that repairs and maintenance for a complex are completed at no additional cost to condo owners. This does not always happen. There will be times when your condo fees will not cover the full cost for maintenance or repairs. Or if your condo association goes over budget, you might need to pay a special assessment to cover these costs or any legal fees if your condo association runs into any legal troubles. This can happen without prior warning, so do not be surprised if you are expected to pay a special assessment. As a condo owner, you have to pay these assessments and fees whether you want to pay them or not.
When you own a condo, you are jointly owning a property with individuals you do not know or who you might not have otherwise chosen to own property with. The people who will be joint owners with you in your condo complex will change throughout the time that you are a condo owner. As a joint owner, you will only have control over and a say over what happens inside of your unit. As a condo owner and member of your condo association, you might not have control over or a say over what happens with group decisions affecting the common areas of the complex and other condo owners. If the other members want to repaint your lobby and you do not want to do this, they will probably get their way and your lobby will be repainted. It will be up to them what happens, how and when this work will be completed.
Even when you pay off the mortgage for your condo and own your unit outright, you will still be responsible for paying condo fees and assessments, these fees are never going away. Monthly condo fees can range anywhere from $300 to $800 or more per month, depending on where you live, the amenities in your complex, and the age of the building. Amenities such as a pool, fitness centre, elevators, etc. will result in higher condo fees. And older buildings usually mean that you will spend more money on repairs and maintenance.
If you are selling your condo and your condo fees have doubled or tripled since you bought your condo, you might have more difficulty trying to sell your condo since it will be harder for you to find a buyer who is willing to pay mortgage and condo fees. This means that you might have to lower your asking price when you sell your condo, risking a lower than expected return on your investment or a loss if you need to find a buyer for your condo.
Condo Association Rules
Condo association rules and bylaws are another potential downsides of condo ownership since rules regulate what you can and cannot do with your unit and other things. Not everyone is willing to allow people to dictate such things about their lives and restrict what they can and cannot do. And you cannot pick your neighbours so this might be hard for you.
Potential for Appreciation and the Return on your investment (ROI)
Another risk you face when purchasing your condo if you are treating your condo as an investment is that you might see the return on your investment that you expected or hoped to see with a condo as you might see with a townhouse or house. If this concerns you should check real estate prices in Toronto and speak with a real estate agent or broker about your concerns.
Any major repairs, renovations or upgrades you do for your condo might not necessarily translate into your condo being worth more money or selling for more money. You might see a return on your investment in the money you spent on repairs. This might be the case for a detached house this is not often the case for condos.
The potentially high cost of ownership for condos
Another potential downside for condo ownership is the potentially high cost of ownership associated with owning a condo. While it might be more economical for you to purchase a condo or this might be all that you can afford, you might have a better return on your investment purchasing a house or townhouse instead of buying a condo.
You are responsible for everything inside your unit
When you own a condo, you are responsible for everything inside of your unit. This means that while your condo fees will cover the maintenance and upkeep for your building. But if something major happens inside your unit like your washing machine breaks you will be solely responsible for the cost of having this repaired and having your washing machine repaired. And you will be responsible for insuring your unit and all of your belongings. If you are really interested in buying a condo, you need to gain a clear understanding of everything you are responsible for and everything you are not responsible for.
While condo living might be great for you, there are some lifestyle considerations and other things you should take into consideration before you buy a condo. Whenever you purchase real estate, you are not only purchasing property, you are committing to investing in a community.
Related article: How to invest wisely in Toronto’s real estate?
Things to consider when you are buying a condo in Toronto
Something that is important to remember about condos is something that differentiates condos from detached houses and freehold townhouses. When you are a condo owner, you only own the unit. You also own a share in the ownership of the land where your condo building or complex is located and the common areas in your complex. When you have a condo the costs for maintenance and upkeep are shared with your fellow condo owners in your condo association. In this situation, your condo association’s Board of Directors or the property management company that manages your complex is charged with making any important decisions about maintenance, upkeep, and upgrades for your complex.
Questions to ask when looking at condo townhouses and condos
Before deciding to purchase a condo, a condo townhouse or move into a condo or a condo townhouse community, there are a series of questions that you should be asking. Finding out the answers to this series of questions can help you to decide whether or not living in a certain condo community or condo townhouse community is the right choice for you and your family.
What are the condo association or Homeowners Association rules?
Before you decide whether or not living in a condo or a condo townhouse is right for you, you will need to find out what the condo association’s or the Homeowners Association’s rules are so you can determine whether or not you are willing to abide by them. Do they have any restrictions or rules that you cannot see yourself abiding by? If the answer is yes, then you should find a different place to live.
You should ask to get a copy of the Homeowners Association’s or condo associations’ covenants, conditions, restrictions, and bylaws. This way you can learn what the rules are and determine whether or not living in a given condo or townhouse community is right for you. You should also have your attorney review these rules with you.
How much are the monthly or quarterly and yearly Homeowners Association/Condo association fees and assessments?
You should find out how much your monthly, quarterly, and yearly Homeowners Association or condo association fees and assessments are, and when they are due. You should ask if any major renovations or expansions are planned. You should ask if the following things from this list are covered by your condo fees:
- Grounds maintenance
- Exterior maintenance for townhouses
- Sewer services
- Master insurance
- Road maintenance
- Snow Plowing
- Trash pick-up
- Pool/fitness centre and other
- Security, if you are in a gated community or have a doorman
If you are looking at pre-construction or newly built condos or condo townhouses, is there any additional work planned for the community (e.g. building more units, adding new amenities, changes to the common areas, etc.)?
This is an important question to ask since if you can find the answer to this question if you are looking at pre-construction or newly built condos or townhomes how many phases of the project in the community have been finished. If there are any phases for the community which have not yet been completed, you can ask about how long additional work might take. You can also ask about whether or not any additional work is planned.
How much money does the condo association or the Homeowners Association who manages the complex have in reserve in their capital reserve fund?
If you are looking to move into a townhouse condo or condo complex, you should ask about how much money the association managing the complex has in their capital reserve fund. The funds in the association’s capital reserve fund are typically used to cover the cost of any additional expenses that might come up. This capital reserve fund should contain at least 10 percent of the association’s annual revenue budget. Finding out the answer to this question is important since if you learn that the association managing the complex does not have sufficient funds in their capital reserve fund you might be at a higher risk for having to pay a special assessment, additional fees the association will charge owners to cover the costs of capital improvements or unexpected damages.
Who is responsible for fixing what?
It is imperative that you find out which repairs and maintenance issues the condo association or Homeowners Association (HOA) will be charged with fixing and which repairs and maintenance things you will be on the hook for repairing yourself.
If you will be living in a condo or condo townhouse complex, who is charged with managing the complex?
If you are moving into a condo or a condo townhouse should find out whether or not a condo association or Homeowners Association manages the complex or a professional management company manages the complex. While you may initially pay more money if you have a professional management company managing your complex, in the long term you might save money. You might save money as a condo or townhouse owner having a professional management company manage your complex since these companies especially if they manage multiple complexes might have greater negotiating power when negotiating the cost for maintenance services such as lawn care with lawn care or landscaping companies.
Is the condo association or Homeowners Association currently involved in any legal disputes?
It is important for you to find out if the condo association or Homeowners Association is involved in any legal dispute since this might serve to indicate whether or not there is trouble or conflict with the organization. Knowing this might help you avoid paying a special assessment to cover the legal fees if the condo association or Homeowners Association is having legal troubles.
- How many units are currently for sale in the complex and are any units currently in foreclosure?
- What are the community’s common areas? What are the rules and hours regulating the use of the common areas?
- How much parking is available?
- If you have a car or cars where would your parking spaces be? How does guest parking work?
- Do any investors own units in the building? If yes, how many investors own units in the building? How many units in the complex are owner-occupied? How many units are rental units?
When looking at condo townhouses or condos you should be speaking with your lender to determine what type of loan will be the best for you to purchase a home. Your lender will have some specific questions about the complex such as how many units are owner-occupied, what percentage of the condo association or Homeowners Association fees delinquent, etc.
You should also speak with anyone who is already living in the complex. You should be asking them about they like the most about living in a complex and what they dislike the most about living in the complex. You should take advantage of this opportunity to hear about what they think about the quality of maintenance, the condo and/or Homeowners Association. At this time, you can learn more about if there are any activities within the community that they can recommend that you can participate in.
These conversations can be incredibly helpful and help you decide whether or not choosing to live in a certain condo or condo townhouse complex is the right decision for you and can help you to avoid some headaches down the road.
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Similarities between townhouses and condos/Things they have in common
There are many similarities between condos and townhouses, this is especially true for townhouse condos. The benefits and downsides associated with owning and living in a townhouse condos and condos are almost identical since townhouse condos take the concept of condo and condo living and apply it to townhouses. Both townhouses and condos allow you to enjoy the benefits of homeownership without buying a traditional detached single-family home. This allows first-time homebuyers to invest in the Toronto real estate market at a lower price point.
Depending on how much your monthly rent payment is, buying a condo or townhouse might allow you to save money with a monthly mortgage payment given how high rent is in the City of Toronto. And at the end of this, you will have something to show for all of the money you paid for your mortgage since this is not the case if you are leasing or renting. Each month you pay your mortgage means you are coming closer to owning your home outright. And owning your own home allows you to customize your home in ways you cannot customize your home if you are renting.
Tax benefits you can enjoy as a homeowner
As a homeowner, you might be able to qualify for certain tax breaks. Some tax breaks will allow you to deduct the money you pay in interest on your mortgage from your property tax payments. If you are renting property, there is not usually a tax break.
Each month you pay your mortgage you are getting closer to owning your home outright
When you lease or rent a home or apartment when you leave what do you have to show for all of the money that you have spent? When you buy a townhouse or condo and have a fixed-rate mortgage you will have more predictable fixed costs that can make budgeting and saving easier. And as mentioned earlier at the end of your mortgage, all of the payments you would have made would have helped you to eventually pay off your house.
It is expensive and risky to invest in real estate
It is important to note that it can be expensive and risky to invest in real estate and be a homeowner. While your mortgage payment might be fixed it still might be higher than your rent payment. And if you are buying a home unless you can qualify for special programs for first-time homebuyers you will need to put at least 20% to 35% of a home’s sale price down or appraised fair market value, and you will need to cover closing costs, moving costs, and taxes. All of these costs can make buying a home incredibly expensive. And you will need to have a solid credit history, credit score, sufficient funds, a solid employment history, a low debt-to-income ratio, a steady income, and more to convince lenders to give you a mortgage with more favourable terms and rates.
If you are buying a home, it’s possible that your home’s value might not increase during your first few years of homeownership. It is common that during your first ten (10) years of homeownership the majority of your mortgage payments go towards paying down the interest on your mortgage instead of paying down the principal. If you ever plan on borrowing against the equity in your home this might make you ‘house poor’.
Another risk you are taking with purchasing a home is that you might not see a return on your investment. The housing market tends to change, and things change so you might see the return on your investment that you were expecting or hoping to receive. You might even lose money depending on when you decide to sell your home and your investment could end up being a net loss.
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Differences between townhouses and condos
While there are many similarities between condos and townhouses, especially for townhouse condos and condos, there are some important differences between condos and townhouses.
First, while it might be more economical initially to purchase a condo but you there is a potential for a better ROI in the short term for a townhouse versus a condo. And condo fees tend to be higher than Homeowners Association fees for a condo townhouse.
What happens when you finish paying off your mortgage in a condo and a condo townhouse vs. a freehold townhouse
When you own a freehold townhouse or a house and you finish paying off your mortgage, you will own your own home outright. When you own your home outright you will only be responsible for paying for your home’s maintenance, upkeep, utilities, services, and property taxes. This means that you will no longer have a monthly mortgage payment. However, if you own a condo or a condo townhouse you will still be responsible for paying condo fees or Homeowners Association (HOA) fees, plus assessments since the fees never end with condos or townhouse condos. The only time that condo fees or Homeowners Association fees end is when you sell your condo or your townhouse condo.
Differences for ownership, maintenance and maintenance costs with a condo and a townhouse condo vs. a freehold condo
When you own a condo you own a condo, you own your unit, a share in the ownership of the land where your condo building or complex is located, and a share in the common spaces in your condo. And the costs for the maintenance and upkeep for common spaces will be shared among the condo owners in your complex or building. When you own a condo or a condo townhouse the Board of Directors for your condo association or the property management company who manages your building or your complex make the important decisions that impact you as a condo owner related to the common areas, maintenance, and upkeep for the common areas in the complex and the complex. All of the maintenance costs for common areas are shared between condo owners and owners of condo townhouses, where you own the inside of the unit and your Homeowners Association fees cover the cost of maintaining the exterior of your unit.
This means if it snows and you own a condo or a townhouse condo then you will not responsible for shovelling snow or clearing the walkways. Your condo fees or Homeowners Association fees cover the cost of paying someone to come to shovel and clear the walkways. But as a condo owner or owner of a condo townhouse you are responsible for the upkeep, maintenance, and repairs inside of your unit as well as ensuring your home and all of your belongings.
When you own a freehold townhouse, you own the dwelling, and the land the dwelling is, including the front yard and backyard, everything contained within your property lines. You, the homeowner who is responsible for making every single decision about upkeep, maintenance, completing repairs, and upgrades for your home. You are the person who is responsible for paying these costs and ensuring that when it snows the walkway gets cleared. You have so much more freedom owning a standalone condo since you decorate it to your preferences and there is no Homeowners Association or condo association dictating what you can and cannot do with your home, how many pets you can have, what types of pets you can have, and what you can and cannot do inside and outside of your home. Owning a freehold condo means more responsibility and autonomy that comes with this freedom and fewer fees, but it might be less convenient to own a freehold townhouse and you might have fewer amenities if you own a freehold townhouse as opposed to owning a condo or a condo townhouse.
Convenience and amenities available in a condo and a condo townhouse vs. a freehold townhouse
While owning a freehold townhouse means you might pay more money for your home because freehold townhomes are in limited supply and in high demand in the City of Toronto. You are more likely to see a higher return on your investment (ROI) owning a freehold townhouse when compared to a condo and a condo townhouse, but you will lose out on the convenience and possible amenities a townhouse condo and a condo offer. While freehold townhouses are usually bigger than condos and condo townhouses which usually are not bigger than three bedrooms. And freehold townhouses offer more outdoor space as well, they might not have certain amenities that condos and condo townhouses have such as a swimming pool, fitness centre, sauna, party room, rooftop deck, etc. and potential proximity to public transit.
Things to consider before you seriously consider investing in real estate as a first-time homebuyer
If you are reading this article and you are a first-time homebuyer that is seriously considering investing in the Toronto real estate market, there are some questions you should be asking yourself. First, are you sure that you are financially, mentally, and emotionally ready to become a homeowner? Are you willing to face the trials, tribulations, risks, and headaches associated with homeownership, along with enjoying the rewards associated with homeownership? Investing in real estate and homeownership are without risks and they are not for the fainthearted. Do you have the money to make this happen? Will you be able to afford to spend at least the recommended one to three percent of your home’s appraised fair market value or purchase price, whichever is higher on maintenance and upkeep for your home?
Are you willing to make the necessary sacrifices and commitments to become a homeowner? If you rent a home, are you willing to give up the convenience of having your landlord fix things as they break, perform maintenance and upkeep on your home? Are you willing to give up the flexibility of renting or leasing, in that it is easier for you to pick up and move or relocate if necessary? Do you have sufficient funds for a down payment, closing costs, moving costs, and the other costs that might come up during this process? Are you willing to devote time and energy to work with a real estate agent or broker to find your dream home? Do you have any concerns about committing to live in a certain area or neighbourhood for at least several years so you can ideally see a return on your investment?
Another consideration, if you are beginning to consider investing in real estate in Toronto and buy a house or condo here is, what goals do you have for this? What are your objectives? What do you want to get out of this transaction? Purchasing and investing in real estate might be one of the biggest and most important financial decisions you may ever make, so you should be clear on what you want in a home, what you are hoping to get out of this, and what you are looking for. Have you ever considered renting out this home for rental income or have this be an income-generating property for you? If you ever move into a new home, would you ever consider renting out the home you are looking to buy now to generate extra income?
These questions might seem odd, but if you are intentional with your goals, have a clear idea of what you want and how to make this happen, you stand a much better chance of making all of this happen since this can help you to develop a plan of action and concrete steps in the process to make this happen. If you go into this knowing what you want, where you want to live, how much you want to pay, and what you want to get out of this, you will be more prepared, and this process might be easier and less stressful for you. It might be easier for you to make your dream, which you can think of a goal with an action plan, a reality.
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Hopefully, now that you have reached the end of this in-depth comparison and analysis of townhouses versus condos, you now have greater insight into what your options for housing are in Toronto as it relates to living in a condo or a townhouse. Ideally, after reading this guide you now have a better idea of whether or not townhouse vs. condo living is a better fit for you. You should now understand more clearly the differences between condos and townhouses, condo living, townhouse living, and the advantages and disadvantages associated with condo living when comparing living and owning a condo, to living in and owning a condo.
It is important to remember that there are always risks when you are investing whether you are investing in real estate, a business, the stock market, etc. Hopefully, now that you have finished reading this guide you have some food for thought and can decide whether or not you are ready to invest in real estate. This guide is not meant to the be-all and the-end-all for condo living and condo ownership versus townhouse ownership and townhouse living, it meant to help you learn more about how they work. Reading this guide is meant to help ensure that you can make a decision about what is right for you and can enter this process with your eyes open, armed with the knowledge and tools necessary that can help you make the best decision for you and your family.
It is important that after you have read this guide and decide to invest in real estate, that you are patient in your search four next home. You should be prepared for the possibility that what you might have thought wanted or needed might change, this is normal. You may have begun reading this guide leaning more towards investing in condos or townhouses, and this might have confirmed your previous opinion. Or reading this guide might have given you some things to think about and you might now think that you might prefer something else. The process that is part of finding your next home is often draining and time-consuming, do not be surprised if it takes you some time, a few weeks, several months, or more of looking to find, close on, and move into your new home.
It cannot be emphasized enough how being prepared, patient, and flexible will make this process easier. The home you might end up buying could be completely different from the home you were imagined that you would buy or were dreaming of. Things change, our tastes, needs, and lives change. The decision about where to live and where we want to make our home is an important decision, you should take your time when making decisions about moving and where you want to live.
Where we live has a huge impact on our lives and our family lives. Where we live can shape our life trajectories and if we are feeling content and comfortable with where we are living this can help bolster our mental health, happiness, and productivity. If we end up living somewhere that is not a good fit for us and our family, it is important to remember that everything in life ends and nothing is permanent. However, it is recommended that you are deliberate with considering where to live so you can avoid the stress, frustration, unhappiness and other negative consequences that come with living in a place that is not a good fit for us.
Therefore, it goes without saying that if you are buying a home in a place because you want to put down roots and stay here for a while that you should take your time, do your diligence, be deliberate, and strategic with your choice. You and your family will be living with the consequences of your choice for a while. Pick a place where you feel comfortable presently that can ideally be a place where you can grow. You should consider your present situation but also look towards the future. You ideally want to be able to find a home that will be a good fit for and your family now but that ideally will be a good fit for you and your family in the years to come.
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