Large construction cranes sitting next to towers of concrete and glass are common-place images across many of Canada’s major city centres. Recent data suggests housing starts fuelled by condo construction is surging, despite expectations they would cool in 2012. Last April, housing starts hit the second highest output on record with 244,900 starts or 18% above industry expectations.
What does this reveal about Canadians?
We’re condo nuts. We can’t get enough of them, especially in markets like Toronto, Vancouver and Montreal which combined, are largely responsible for this condo construction craze.
TD Canada recently polled current condo owners and individuals looking to buy a condo in the near future. The results revealed that Canadians don’t mind paying extra Loonies for a piece of condo living.
TD found people are drawn to condominiums because they require less maintenance than a house and are more affordable. One in four said they were attracted to the amenities, such as the gyms, pools and party rooms associated with condo buildings.
When it comes to funding the condo lifestyle, Canadians aren’t afraid to pony up the cash. One in five said they were willing to pay up to $400 a month on condo fees while an astounding 10% said they were willing to pay $600. Condo buyers from the market most associated with the craze, Toronto, were the most willing to pay, with 39% prepared to pay up to $400 in condo fees (double the national average).
Although condo fees pay for such things such as security, swimming pools and window washing, they are vulnerable to rate increases. However, one in three Canadians say they already have a buffer built into their budget to account for possible condo fee increases. Unfortunately, the report did not reveal whether Canadians have also created separate buffers for potential increases to their mortgage rates.
One strategy to prepare for an increase in either condo fees or mortgage rates according to Farhaneh Haque, Director of TD mortgage advice, is to utilize your prepayment options. “You can also explore flexible mortgage options that allow you to pay more towards your mortgage when you can, then, upon an approved application, ease off on payments when you need to. This can be a useful feature in the first few months of transition to a fee increase”
Condos will continue to remain an attractive option for home buyers because of their affordability relative to other housing options. Expect construction cranes to continue to grace Canadian city skylines for the foreseeable future.
Source: TD Condo Poll
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