Toronto’s troubling affordability has pushed many potential home buyers to cheaper alternatives. The average price of a home in the city was $1,005,495 in August. Condo apartments are vastly more affordable, and their popularity has maintained as the more affordable option, be it buying or renting. An in-depth search into this market, however, may expose some differences between what a condo is, and what an apartment is.
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What’s the Difference?
A condo is an individual unit in a building that is owned as opposed to rented. Purchasing a condo requires a downpayment and closing costs, as well as paying a monthly mortgage fee. An apartment is similar in structure to a condo but is defined as a residence that is rented. You don’t own the property, as it’s typically owned by a landlord and you pay a monthly agreed-upon sum of rent for the length of a specified term. Below are some of the key differences between the two:
Equity
- With a condo, since you are the owner, you are able to build equity. You can renovate it, potentially rent it out, or even sell it. You also have the ability to make improvements to the home to increase the resale value.
- Renting an apartment builds no equity because you’re not the owner. You only rent the space that you’re in, without any long-term financial gain.
Maintenance
- In a condo, you are responsible for repairs or maintenance in your home.. The condo association will take care of the exterior issues but repairs are up to you.
- An apartment allows the property manager to take care of any issues that arise. It’s their responsibility to carry out repairs or maintenance.
Flexibility
- Condos offer flexibility with adjustments to your unit, and the ability to rent it out or sell it.
- Apartments offer flexibility in relocating when the lease is up. If you wish to move, you’re not required to sell.
Costs
- Condo owners pay their mortgage and monthly condo association fees which include insurance, maintenance, and other shared expenses with condo owners.
- Apartment renters pay a fixed monthly amount to their landlord which includes utilities and possibly other fees agreed to in the lease.
Comparison in Equity and Price
According to the Toronto Regional Real Estate Board (TRREB), the average price of a condo in August 2023 was $724,549. In this same time frame, the average rental for an apartment was $2,981.
Although buying a condo seems very intimidating with such a high asking price, equity can be built over time when you own a home. The housing market can fluctuate which can increase the value of your condo. For a condo that costs $724,598, your average monthly mortgage payments would be $4,312 Added to this are property taxes, property insurance, and utilities that you must pay monthly. Compared to $2,981 a month, you can clearly see which one is more affordable, but that isn’t necessarily always better.
Equity is what sets buying apart from renting. In 2020, the average condo price was $633,484. If you’d bought a condo then and sold it in August of this year, you’d have made a profit of $91,065 in that short time.
If you are house hunting, give us a call today! The experienced real estate agents at Zoocasa are here to help you secure your desired home!
