TORONTO, April 18, 2012 /CNW/ - Attracted to the urban lifestyle, three-quarters of Canadian condo buyers say condo fees are worth the extra monthly expense to enjoy the benefits of living in a condominium.
The TD Canada Trust 2012 Condo Poll surveyed urban Canadians who recently bought or intend to buy a condo and found they are drawn to condos because they require less maintenance (60%), are more affordable (45%), and offer more amenities (25%) than a house.
"Managing your housing expenses is about prioritizing your needs and budgeting accordingly. It's clear that the convenience of condo living is important to many Canadians, and they are willing to pay the monthly fees that come with owning a condo," says Farhaneh Haque, Director of Mortgage Advice, TD Canada Trust.
The poll found that one-third of condo buyers (35%) are willing to pay up to $200 per month in condo fees, 44% would pay up to $400 and 17% would pay up to $800. Across all cities, Torontonians are willing to pay the highest fees; 38% are willing to pay more than $400 and 16% more than $600. Conversely, the majority of Montreal residents (59%) wouldn't pay more than $200 per month in condo fees.
Even though they've set these limits, many condo buyers understand that monthly fees can increase at any time and have a plan: 29% have a buffer built into their current budget and 34% say they could cut back in other areas in the event of an increase.
"The possibility of a fee increase can be a little unnerving," says Haque. "While there's no way to 'lock-in' to a monthly fee like you can with a mortgage, you can prepare for a fee increase by building a buffer into your monthly housing budget, as some Canadians have wisely done. That way if fees go up, it won't be a major shock to your cash flow.
If they don't increase, you have extra money to put aside in savings or towards your mortgage. 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."
Top features Canadians look for in condos
According to the poll, condo buyers think the most important features when deciding on a condo to buy are:
- Good building security (94%) and low condo fees (94%)
- Energy-efficient building features (92%) and attractive interior design (92%)
- A balcony (90%)
- Parking for their car (87%)
- Close to public transit (84%)
Women are more likely than men to look for a building with a balcony (92% versus 87% of men) and environmentally-friendly features (86% versus 79% of men), while men are more likely to say finding a brand new condo - not a resale (56% versus 46% of women) - is important to them.
Condos as stepping stone to home ownership
Many condo buyers see condos as an affordable alternative to renting: 29% say owning a condo is cheaper than paying rent. But, one-quarter (24%) say paying condo fees still feels like paying rent so they are saving up to buy another place where they won't pay monthly fees.
"Purchasing a condo allows you to build equity rather than continuing to pay rent as you save for a house," says Haque. "At the same time, it's important you talk to a mortgage expert, because it's not just a straight comparison of your monthly rent and some utilities to a monthly mortgage payment and condo fees."
Condos as investments
Almost one-third of condo buyers (32%) say the main reason for their condo purchase is that it is a good investment. Recent housing forecasts do not seem to have fazed most Canadians. Only one-third (34%) of the general Canadian population say recent forecasts have made them less likely to buy a condo.
"Recent housing forecasts have predicted that an over-supply of condos will cause a drop in prices. How this affects your decision to purchase a condo comes down to your goals at that time," says Haque. "If you are buying a condo and see it as a source of rental income that you'll move into when you are ready to downsize, this drop in value will likely not have a big effect.
On the other hand, if you see a condo purchase as a way to build equity as you save up to buy a home, you need to consider the potential effect of a decreased price when you sell on the money you will have towards a down payment on a house."
Of those who are buying condos that will not be their primary residence, 46% think they are a good investment to buy and sell at a profit when prices have gone up. But - that is not the only way Canadians see a condo purchase as an investment. Almost an equal number (42%) see them as a long-term source of rental income and 38% see them as a source of rental income for now that they will move into later when they are ready to downsize.
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