It’s a good time to buy a condo.
There, we said it.
We’d stop here but that would make the article pretty short, so let’s review three reasons why as of July, 2023, it’s a good time to buy a condo apartment in Toronto.
As a bonus, we’ll also give you the three rules to follow to make sure it’s the right condo unit that you buy.
Here we go.
Reason #1 – Prices
The price of a condo in the city of Toronto is actually lower now than it has been in the past. The average price for a condo apartment in the city as of June, 2023 is approximately $770,000. That’s lower than it was last month (when it was about $784,000) and in fact, it’s even slightly lower than it was a year ago (June, 2022), when it was about $773,000. One of the rules in real estate is that you make money when you buy, not when you sell, so buying a condo now bodes well for when you’re eventually ready to sell it.
Reason #2 – Appreciation
With rising variable rates for mortgages, lots of buyers at the lower end of the property ladder are finding the numbers don’t work for them to buy. That may sound counter-intuitive, like we’re saying “It’s more expensive to finance real estate, so now’s the time to buy!” but bear with us. The reason higher financing costs means buying a condo is a good idea has to do with how the increases are pushing our rental rates higher and higher. Earlier this year the average rent in the GTA hit over $3,000 a month and it ain’t going down anytime soon as more potential buyers have to continue renting. Even if you have no interest in being a landlord, any housing type that is in demand both for owners as well as investors tends to appreciate well.
Reason #3 – Choice
Finally, we’ve seen six consecutive months of rising numbers of active condo apartment units on the market in the city. With over 3,330 units for sale as of the end of June, we’re not far from our two-year high of almost 3,600 units for sale that we saw back in June, 2022. More choices mean more good options overall, so you don’t have to settle for a condo that doesn’t quite fit your needs.
There you have it, three reasons why we think now is a good time to buy a condo in the city. If we’ve convinced you on that front, you might be interested in how we help our clients buy the right condo. Here’s our three rules to follow to make sure that happens.
Rule #1 – The building is well situated
You can’t change where your building is located, nor are you likely to see major changes in the neighbourhood over the short term. This means we look for a well situated building, not facing a slaughterhouse, backing onto a major highway or sitting miles from any transit.
New construction coming up that will block views or change the feel of the area also need to be taken into consideration. The neighbourhood should be a mix of residential and commercial ideally.
Rule #2 – The unit itself is well situated
In every condo building there is tremendous difference in sale prices that is due to where the unit is located. There is often one direction that the “best” units face and one direction that the “worst” units face. In addition, close proximity to certain building amenities or structural features (gym, garbage chute, parking garage entrance) can make an otherwise lovely unit difficult to sell.
The ideal unit faces the best view in the building and is located close but not directly beside noisy or disruptive amenities or structural features.
Rule #3 – Common areas and amenities are easy to maintain
Maintenance fees can have a huge impact on the value of units in a condo building. With current mortgage rates, for every $100 worth of maintenance fees, buyers could pay for approximately an additional $16,000 worth of mortgage.
This means that a condo that lists at $770,000 with $900 a month maintenance fees would cost the same monthly as a $800,000 condo with $700 a month maintenance fees. Even with rising interest rates, mortgage payments include a principal repayment portion that helps you build equity, whereas maintenance fees are simply a cost that you never recover.
Ideally, choose buildings that avoid expensive amenities that often require repairs, like hot tubs, pools and lavish party rooms. Common areas that are not well designed for high traffic volumes wear out much sooner, requiring costly renovations to avoid having the building look worn down. While individual condo buyers don’t get to dictate what amenities or common area design is in a building, by looking first at buildings that limit the amenities, we stand a better chance of avoiding skyrocketing maintenance fees.
If you are considering buying a condo, please contact us to discuss your options. We know when to buy and we know how to help you buy the right unit, so let’s talk!