In real estate markets like Toronto and Vancouver, many condo owners purchase their homes intending to sell and upgrade to a fully detached home eventually. Unfortunately, due to the increase in prices for the average detached family home in both markets, finding an affordable upgrade is becoming increasingly difficult, and for some, impossible.
According to a recent report by TD Bank Group, it costs twice as much to purchase a detached home in the Greater Toronto Area (GTA) as a condo, and that number grows to three times as much in Vancouver. Even though condo prices are on the rise, many condo owners find that after the fees associated with real estate transactions, the benefit gained from trading up to a more spacious home is modest at best.
In fact, many condo owners may be better off lowering their expectations and considering other house options, like family-friendly condos or townhouses. If you are a condo owner looking for more space and a detached home is out of your price range, here are a number of considerations to take into account before choosing a townhouse.
Condo Townhouses versus Freehold Townhouses
The biggest consideration to take into account when considering trading up to a townhouse is whether a condo townhouse or freehold townhouse is right for you.
A condo townhouse operates in a similar manner to a condo building. Like a condo, you own the interior of the townhouse and have complete control over the inside of your unit. You and the other owners in the townhouse complex own the exterior and common spaces jointly.
Like a condo, you’ll pay monthly fees to cover the maintenance and upkeep of the exterior of the townhouses and grounds, along with snow and garbage removal. Condo townhouses are more common and tend to be less expensive than freehold townhouses.
A freehold townhouse is more like a fully detached home. You own the land itself and the townhouse that sits on it. You are responsible for the maintenance of the interior and exterior of the property, along with snow and garbage removal and lawn care. You have complete autonomy over your townhouse and do not have to consult your neighbours on any changes you want to make to your home. Freehold townhouses tend to be more expensive and rarer than condo townhouses.
Do You Use Your Condo Amenities?
Most condo buildings boast a large variety of amenities including pools, game rooms, guest suites, party rooms, even pet and car wash areas. If you are a condo owner in a building with amenities like these, you should consider which amenities you enjoyed and used on a regular basis. This consideration will inform your decision about the types of amenities you’d appreciate in your townhouse complex.
For example, if you have a vehicle and commute daily, you may favour a townhouse complex with underground parking instead of individual driveways. Or, perhaps you loved the rooftop patio on your condo building, in which case you may find yourself drawn to a townhouse complex with a courtyard or other shared common space.
Alternatively, perhaps you did not end up using any of the amenities in your condo building. If that is the case, a freehold townhouse without any additional amenities may be the right choice for you.
What Will Your Family Look Like in Five Years?
If you are considering purchasing a townhouse because your condo is too small for a growing family, you need to carefully consider how a townhouse will suit your family in the years to come. If you haven’t started your family yet, how many children to you plan to have? If the answer is one, a two-bedroom townhouse would be sufficient. But if you are planning a larger family, you’ll need more space.
These questions are important to answer, because we can’t predict what will happen to the housing market in the years to come, and this may be the last property you buy for many years. That’s why it’s important to ensure it will meet your family’s needs.
Can You Afford to Upgrade?
Selling your condo and purchasing a townhouse may sound like a great solution to your starter-condo problems, but it’s important to gather all of the facts before you move forward and list your property. Make sure to sit down with a real estate agent and go over all of the fees associated with selling your condo so that you have a clear idea of how much you stand to profit from the sale.
Next, research potential townhouses in your area and make sure you can afford to purchase one. Your new townhouse should not impact your monthly budget so heavily that you cannot afford to save for retirement or pay down debt. Run the numbers and make sure that your decision is a sound financial choice for your family.
While there are many factors to take into account when considering whether to trade up from a condo, we feel that these are the must-consider issues that will help you decide if upgrading to a townhouse is a smart move for your family.