There are many factors to consider when you’re looking to buy a property, the biggest one being the type you want – should you buy a house or a condo? Aside from obvious differences such as amount of living space, yard vs. amenities, and proximity to neighbours (noise), there is also a significant difference in costs.
The most notable difference is the upfront cost and mortgage payment. Before jumping in, it’s important to ask yourself, “how much of a mortgage can I afford?” to understand what type of properties you should be looking at. Using a mortgage affordability calculator can help you answer this question.
In Toronto, the cost of a detached home is double the price of a condo; the average price per square foot of a Toronto house is $711, compared to $683 for a condo.
In rapidly heating areas like Hamilton real estate, the average cost difference between a house and condo is just over $100,000 (the price per square foot of a home is $306.19, compared to $391.63 for a Hamilton condo). This smaller price difference makes deciding between the two property types more difficult. However, a difference in value comes with a difference in mortgage payments and property taxes – the higher the value of your property, the more you’ll pay in property taxes and mortgage payments.
It’s important to understand the costs associated with each type of property as well as the pros and cons of each.
Understand How House Expenses Add Up
A house may come with a nice backyard where you can spend summers tending to your garden. But this comes with a cost of roughly $500 per year, as you’ll have to purchase things like a lawn mower, plants, fertilizer etc. to keep your garden looking great. Factor in the cost of repairs at 1 per cent of property value annually, plus utilities and insurance, and you’re looking at a pretty hefty annual payment – and this doesn’t even include your mortgage!
Condo Expenses: Fees vs. Labour
When it comes to condos, we all know that condo fees are one of the biggest considerations when looking to buy. Typically, condo fees can range anywhere from 60-70 cents per square foot, working out to between $485 and $566 per month. This usually covers the cost of repairs and upkeep of common spaces, amenities and hydro (a pool, gym and rooftop terrace cost money!). Be aware that these fees will likely increase over time, as the building ages and more expensive repairs are needed. Although you’ll be paying condo fees, you’ll save on property taxes, repairs and utilities as a lot of this is covered with your fees, and with a smaller space, less can go wrong!
Some Other Things to Consider
Aside from cost, there are lifestyle issues to consider, the biggest one being space. If you’re looking to raise a family, you may prefer a house where your family can have the space to play and grow. On the other hand, if you’re a single person or couple, a condo may fit your needs perfectly.
Another thing to keep in mind is proximity to your neighbours. With condos you will be sharing some walls with your neighbours so you may encounter more noise from barking dogs, loud speakers, or just plain, boisterous people. While noisy neighbours are definitely not limited to condos, with houses you do get some buffer between you and them.
Whether or not you choose to buy a condo or a house greatly comes down to two main things: lifestyle and affordability. When you’re ready to buy, using a mortgage broker in Toronto or Hamilton will ensure you get the best rate on your purchase.