Here are some key factors to help buyers decide what is best for them.
The advantages and disadvantages of buying a condo
Condo developments are more popular than ever before, specifically in Toronto and Vancouver. Every year, more and more people are flocking to highrises and new developments whether it be for investment purposes (last year it was reported that 40 per cent of condos in Toronto and 45.7 per cent of condos in Vancouver are owned by investors, according to Statistics Canada,) or to enjoy condo living themselves. But the question remains: what attracts people to buy a condo vs. a house?
Advantages of living in a condo
- No lawn maintenance. Say goodbye to lawn cutting, shovelling snow, and raking leaves. When you live in a condo, all that work is done for you and condo fees will be helping to pay for these services.
- Shared responsibilities. Is the condo’s roof leaking? Is the hallway dirty? Are there pipes leaking? Condo owners share the responsibility of paying for these maintenance repairs thanks to the emergency funds.
- Cheaper utility costs. Utilities in condos and apartment buildings are naturally cheaper because of the smaller square footage and the way the building was constructed. Particularly older houses can have poorer insulation and basements that are harder to heat up. Plus there are multiple floors to heat up compared to just one in a condo.
- Amenities are available. While these may be shared amenities, depending on the building your buyers choose to live in, they can have world-class amenities right at their doorstep that they may not be able to afford if they buy a house such as a sauna, pool, gym, party room, rooftop terraces, library, etc.
- Appliances are often included. When your clients buy a house, they’re much more likely to have to buy all new appliances compared to when they buy a condo.
- Renovations won’t cost as much. When it comes to renovating condos, the overall costs are typically less expensive than with houses because they’re smaller.
- They’re conveniently located within cities. Condos are strategically built in areas where it’s easy for people to get to other amenities they need like grocery stores, transit, gas stations, parks, etc.
- Safety and security are improved. Condos can be safer than houses since most will require residents to have a key fob that opens the front doors. Some condos have their own security guards and surveillance cameras in the lobby, too.
- A better sense of community. When you live in a condo building, you’re physically closer to your neighbours than in a house. This creates a different “community” feel which can definitely be a perk for seniors wanting to live in a close-knit retirement community.
- Cheaper insurance rates. When it comes to condo insurance, rates are typically much lower because you’re actually only paying to protect your indoor living space while the condo association covers damage to the building itself. Every condo board will be different, although it can still be much less than house insurance.
- The initial cost can be cheaper. One of the main reasons why condos are so popular is because they’re more affordable than single-family houses, especially new construction condos.
Disadvantages of living in a condo
- Do they want to share walls with neighbours? Buyers may be less attracted to buying a condo because of the lack of privacy. Like in an apartment building, the walls are shared, therefore, residents may hear their neighbours talking, walking around, or hanging a picture. Some will also have attached balconies. While separated by a barrier, residents may still be able to see and hear their neighbours. Common areas are also shared such as pool rooms, gyms, BBQ areas, etc.
- HOA fees. HOA fees, which stands for Homeowners Association fees, cover necessary expenses like regular maintenance of common areas, lawn maintenance, and other major renovations required to improve the building. These HOA maintenance fees are paid on top of a mortgage and property taxes and can get expensive per square foot. They’re also non-negotiable, so your buyers should be aware of the cost per square foot before even being shown the property.
- Parking is limited. Every condo building will be different, but some have very limited parking spaces. This can be frustrating for couples who have two cars but only one parking space, or none at all. For city-goers, they may have to invest in city parking instead which can be costly on top of their mortgage and HOA fees. Storage is limited. Just like with parking, not every condo unit will have a storage locker. Unlike a house, closets and storage space will be very limited so having a locker can be very beneficial. If one isn’t provided, that may be another investment your buyers have to make.
- More rules. While condo owners own their unit, they still have to abide by the building’s rules. Every condo board will have a different set of rules regarding pets, how many visitors are allowed and when, if you can decorate your balcony, what renovations you’re limited to, etc.
- Limited or no outdoor space. If your clients are outdoor enthusiasts, condo living may not be for them, particularly because balconies can be small, or non-existent. Outdoor spaces are also typically shared, like rooftop patios or BBQ areas.
The advantages and disadvantages of buying a single-family house
Houses can come in many shapes and sizes; attached, sem-attached, townhouse, or a single-family home. In this particular case, we’ll be discussing the advantages and disadvantages of a single-family home.
This type of housing is breaking records all across the country. Even while prices continue to increase, it seems that homes continue to sell and that bidding wars are more common than ever before, even amongst millennials getting into the market for the first time. So, what makes these types of homes such a good investment?
The advantages of living in a house
- Room to grow. If your clients are expecting to grow their family, they might have more space to grow in a house vs. a condo. Plus, overall, a house can be easier to adapt to certain lifestyle changes like starting a home business, or building an extra room if needed.
- More freedom and privacy. Living in a condo means sharing walls and common amenities. But as homeowners, privacy is much easier to come across where they can also follow their own rules and not the condo board’s rules.
- First-Time Buyers Tax Credit and Land Transfer Tax Rebate. The home buying process for first-timers also comes with its perks. The First-Time Buyers Tax Credit is a total tax rebate of $750 offered by the Government of Canada. The Land Transfer Tax Rebate is for first-timers for a minimum rebate of $4,000 depending on where the house is located and the cost.
- More property. With houses, you’re not just limited to a balcony. Property owners will actually own the property and be able to resume their favourite outdoor activities.
- Home equity increases faster than a condo. Boosting your home equity can be easier than with a condo unit, mainly because you have more freedom to make more improvements to increase the value.
The disadvantages of living in a house
- More expensive. This doesn’t always necessarily ring true, but in most cases, buying a single-family home will cost more than a condo, especially come time for resale. Plus, on top of a mortgage and property taxes, owners will need to be able to afford maintenance costs.
- More labour intensive. One of the things that make people attracted to condos in the first place is not having to worry about lawn maintenance or looking after all the rooms on multiple floors of a house. Owning a house means having to shovel the driveway, rake the leaves, and needing to clean more indoors. In condos, cleaning and maintenance are already looked after.
- Less availability in downtown cores. Condos are appealing to those who work in the downtown core in a busy city to limit the amount of commuting they have to do. Houses aren’t necessarily close to downtown cores, so commuting (and either owning a car or being close to transit) will be a must.
The bottom line when it comes to the best types of housing for your clients
The condo vs. house debate has been a never-ending one and ultimately, it will depend on your client’s wants and needs. This is why it’s important to get to know them and really listen to them so you can help them seal the deal on their dream home. Condos can be a great investment because they are less expensive (especially for first-time buyers), they won’t have to worry about maintenance themselves, they’ll have access to world-class amenities, and they’re conveniently located within cities, decreasing the need to commute or even having to drive to the grocery store. However, HOA costs can be high, there isn’t as much privacy as with a home, and parking or storage can be limited. When it comes to houses, there is more room to grow, renovate freely, and actually own property rather than just a balcony. But, costs can be higher, there’s more property to look after and maintain, and they’re not as conveniently located as condos.
If your clients aren’t sure what type of property they want to purchase, make sure they’re aware of the advantages and disadvantages of each choice. This isn’t an easy decision, but as a professional in the industry, you can guide them through the real estate process with ease and integrity and help them weigh the best options for them.