September 1, 2016

Should You Skip Buying a Parking Space?

We all know parking in Toronto is scarce – and is priced at a premium. In fact, there’s a growing trend of urban homebuyers choosing not to bother owning a vehicle or spot at all, especially as services like Uber, Zipcar and Car2Go offer easy and inexpensive options for getting around.

According to a 2011 University of Toronto survey, there is an average of 1.3 vehicles per home in the GTA, slightly below the national average of 1.5. In the city proper, that number drops further to 0.9, meaning a growing number of city dwellers are ditching their cars.

That said, there are still approximately 1.1 million vehicles in the city. With each driver spending an average of $9,000 on their car every year, that’s over $10 billion per year in Toronto alone—not a chunk of change to sneeze at.

So with all the congestion and cost of driving, should condo buyers just skip buying a parking space altogether? Here are a few points to consider before you buy or ditch your spot.

Related Read: Buying a Home Without a Garage or Driveway?

Consider Time Versus Cost When Buying a Parking Space

The first and most important comparison you should use is the amount time you save by driving and owning a parking space versus the money you would save by not having your parking space.

If you’re saving a few hundred dollars each month by not having a space, that’s great, but don’t count out the value of your time. If taking public transit deducts an extra hour or two from your day, that may not be a worthwhile trade-off.

To tally your expenses, ask yourself a few key questions:

• Without a space, will I be able to find parking around my home? How convenient and reliable would it be?
• Would I take public transit? Do I live in an area where public transit is a viable option? Do I want to take public transit?
• How much am I spending or would I spend on my parking space each month? How much is added to my total mortgage?
• Are there added maintenance fees on my parking space?
• Will it hurt the resale value of my home? Not having parking access can be a big deterrent to some buyers, according to Fatima Bregman of Re/Max Realty, who says the lack of one can reduce your home’s resale price by 5 – 10%

Renting and Selling Your Parking Space

There’s also the option of owning a parking spot and renting it out. Depending on your location in the city, your spot could be a very hot commodity. In the busiest areas with the least parking, commuters interested in buying a parking space will spend a few hundred dollars each month for the security of knowing they’ll have one near work.

By renting, you keep the space, adding to your condo value when you go to sell. That said, it’s a bit of added work, especially if anything were to happen in the spot by the new “tenant”. Some condo boards also don’t allow parking rentals, or only allow them to other building residents, so check with them before you dive in.

You could also sell your space, either to someone in the building or an external buyer, again depending on your location. In Toronto real estate, parking spaces can sell for up to $50,000, so it may be worthwhile to ditch yours, if you have other options and don’t need it. (The same goes for real estate in Mississauga, or any large urban area for that matter.) Again, be sure to check with your condo board about their regulations around parking sales.

Remember, these considerations should also be looked at before buying your condo; opting out of a parking space initially could save you time and money, rather than renting or selling it later.

Is having a parking space important to you? Tell us in the comments!