By Penelope Graham, Zoocasa
Special to the Financial Independence Hub
Healthy demand is forecasted for Canada’s condo markets in 2017, and it’s not just young professionals and investors fueling the boom. As low-rise housing prices grow further out of reach, families are increasingly turning to condo life as an affordable housing option.
For many, condos offer the only affordably entry point into the market, especially in Vancouver and Toronto real estate. And while some buyers choose to “drive until they qualify,” suburb life isn’t desirable to everyone, prompting buyers to increasingly sacrifice space to live within city limits.
The Toronto Real Estate Board (TREB) reports demand for high-rise units surged more than any other housing type in 2016, with 20,860 units changing hands – a 19.9% increase. In comparison, detached homes – despite being extremely highly sought – saw a year-over-year change of over 3.10% in the 416 region as sales were limited by tight supply.
Condos still an affordable option
While TREB reports condo prices rose 9.4%, units can still be had for an average of $443,563, compared to $1,252,069 for a detached home. For the average Torontonian, who earns an after-tax income of $76,219, a house remains hundreds of thousands of dollars out of reach; assuming they qualify for a mortgage under the best circumstances (a variable rate of 2% with a 30-year-amoritization, and a minimum 20% down payment), they’ll have a limit of only $636,900 to buy a home.
“The annual rate of condominium apartment price growth has accelerated over the past year as the supply of units available for sale has become more constrained while demand remained strong,” stated TREB President Larry Cerqua in their third quarter report. “Price growth remains well-below those for low-rise home types. Condo apartments continue to be an affordable entry point into homeownership for first-time buyers.”
Recent mortgage qualification rules introduced by the Canada Mortgage and Housing Corporation will also limit buyers’ affordability, causing many to compromise their real estate expectations, or back out of the market altogether: all factors that will support condos and townhouses in Toronto as an increasingly popular choice in 2017.
Builders see value in bigger units
Increased demand in high-rise housing hasn’t been lost on developers, who are responding with projects featuring roomier units and more bedrooms. “This year, we have seen the introduction of larger suites aimed at purchasers who have been priced out of the low-rise market,” stated Brian Tuckey, president of the Building Industry and Land Development Association (BILD), which reports the average unit size is now 809 square feet, up from 767 in 2015. The cost per square foot has also increased to $601, up $26 from last year. According to BILD, condo sales accounted for 60% of the 34,736 home sales in the GTA between January and September, as the supply of low-rise housing dries up – only 764 detached homes were listed for sale in August.
What families should consider about Condo Living
However, condo dwelling still presents some challenges for families, as high-rise housing is often developed with young adults and professionals in mind. It’s important for families to consult closely with their real estate professional and do thorough research when selecting the perfect building for their growing needs. Some of the most important aspects of family condo life include:
A scarcity of schools: Sprouting towers and a flux of new residents can put a strain on existing neighbourhood resources, and especially schools. Some Toronto-region schools have been so overwhelmed by the boost in enrollment demand that they have closed to new admissions and only accept students already attending specific feeder schools. This can be a detail often overlooked or not disclosed to buyers.
In cases where condos are built in previously non-residential areas (like old industrial neighbourhoods, ports and agricultural land), projects for schools, community centres and other amenities have yet to break ground and could take years to come to fruition. Consider, for example, the decade-old Concord CityPlace development built on Toronto’s former Railway Lands. Initially popular with 20-something professionals and students, families have contributed to massive annual 15% growth. Two elementary schools and a community centre are now slated for completion in 2019 – meanwhile, children of all ages have been bussed to schools in other neighbourhoods.
Family-friendly amenities: Condos designed to appeal to a younger adult crowd may offer features that aren’t conducive to family living. For example, sleek amenities such as hot tubs, rooftop decks and gyms are a big draw for an adult clientele but may not be easily accessible – or even dangerous – for little residents. It’s smart to research whether nearby parks and community services offer your family a place for fun and socializing if the building does not.
A young adult population could also pose less-than-neighbourly lifestyle clashes. Newer, higher-density buildings may have less sound proofing than existing stock, with smaller units crammed closer together, resulting in unwanted noise from kids and night owls alike. If peace and quiet are a must, older buildings (which often have thicker, solid-concrete walls) may be the best fit.
Condo boards: Here’s where family condo life can get downright contentious. There are documented instances of families feeling discriminated against in buildings marketed toward adult-only living styles. While attitudes and legal precedents are paving the way to more inclusive buildings, it can be a good idea to check if there has been a litigious history between the condo board and previous residents, and whether you feel a building would be a harmonious fit for your growing family’s lifestyle.
Penelope Graham is the Managing Editor of Zoocasa.com, a leading real estate resource that uses full brokerage service and online tools to empower Canadians to buy or sell their home faster, easier, and more successfully.