In 1993 Bell Canada was facing a big problem in the Greater Toronto Area: there was a huge demand for new phone lines, and if that trend continued, they would run out of phone numbers. So they made a bold move: they introduced the 905 area code for some of Toronto’s most booming suburbs including Mississauga, Vaughan, and Hamilton. While this measure was purely utilitarian for Bell Canada, it introduced a divide between old Toronto and the developing outer suburbs that is still palpable to this day.
The ripple effect of this decision can be felt in almost all aspects of daily life in Toronto but is especially pronounced in real estate. Homes with a 416 area code became known for being expensive, in close proximity to each other, and scarce. Homes in the 905, in contrast, are perceived as spacious, on big lots and, most importantly – more affordable.
These attributes hold true for condos in the 905 as well. Whether an investor is looking for Hamilton condos for sale to resell in a few years or wants to be a long-term landlord with positive cash flow, the 905 areas are considered a good buy. Here’s why you should consider investing in a 905 condo:
Studies show that more newcomers to Toronto are settling in 905 communities instead of the downtown core. This influx of newcomers has led the population growth rate in the 905 to outpace that of the city of Toronto. This steady growth is good news for condo investors looking for condos in Hamilton that is sure to appreciate in value, or a steady supply of possible tenants for condo investors looking to hold the property over the long term.
Steady population growth has predictably done wonders for price appreciation in the 905. While prices for condos in the 905 are about $100,000 less than a similar condo in downtown Toronto (which is great for investors who must have a 20 per cent down payment), strong demand has led steady but reasonable growth in key suburban areas like Mississauga and Hamilton. For example, housing prices in Hamilton were up an impressive 23.49 per cent in May 2017 compared to the same month the year before.
Related Read: 8 Luxurious Hamilton Condos You Can Afford
Built-in Rental Market
Investing in a condo in the 905 area is attractive for more than just the population growth and steady price increases. Long-term investors can tap into a built-in market of both commuters and local workers. While the suburbs of Toronto used to be home to mainly large-scale manufacturing companies, that trend has shifted. More and more major employers in the technology and service industries are moving their corporate headquarters into popular suburban centers like Mississauga (Microsoft) and Hamilton (IBM). These previously industrial-only communities now support a diversified workforce and are much less vulnerable to economic collapse if a single business pulls out of the area.
There are some key differences between purchasing an investment condo in the 905 versus the 416. The biggest difference is the clientele and the size of the condos that go with that clientele. In downtown Toronto, most of the condos available are one- and two-bedroom units; ideal for a single person or couple to rent. If you are looking at condos for sale in Hamilton or Vaughan, you’ll find more two- and three-bedroom units.
These larger units accommodate the larger families and tend to live in these areas, who are either permanent condo dwellers or saving up to purchase their own home. This different clientele leads to renters who tend to stay a long time. Long term renters can be a boon for a condo investor looking for loyal tenants. The downside to the family friendly nature of these condos is that they can experience more wear and tear and may need more repairs.
Finally, city planners are starting to understand that previously industrial-only communities like Oshawa, Hamilton, and Peel are slowly morphing into cities with their own identities, downtown cores, and long-term residents. Planners are beginning to discuss densifying these areas so that they are more than just bedroom communities for commuters to downtown Toronto. Instead of focusing solely on transit getting people out of the community for work, they’re building complete streets that promote cycling and walking and building the charm of their unique community. The urban sprawl of the fifties and sixties is out, and community building is in, and you can be sure that condos will play a strong role in their planning efforts.
While investing in a condo in the 905 is a little bit different than in downtown Toronto, there are many benefits to becoming a property owner in one of these blooming communities.