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 that 60 per cent are drawn to condos because they require less maintenance, 45 per cent said they are more affordable, and 25 per cent said they offer more amenities than a house.
In Winnipeg, condos have increased in popularity, especially among first-time home buyers, as an affordable alternative to buying a house. Last year, condo sales reached their highest level ever with 1,600 units sold, which was a 10 per cent increase over the previous year.
WinnipegREALTORS® president Shirley Przybyl said greater demand for condos is resulting in more condo conversions and developments in the city.
“Managing your housing expenses is about prioritizing your needs and budgeting accordingly,” said Farhaneh Haque, the director of mortgage advice for TD Canada Trust. “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.”
The poll found that one-third of condo buyers are willing to pay up to $200 per month in condo fees, 44 per cent would pay up to $400 and 17 per cent would pay up to $800.
Even though they’ve set these limits, many condo buyers understand that monthly fees can increase at any time and have a plan, so 29 per cent have a buffer built into their current budget and 34 per cent said that they could cut back in other areas in the event of an increase.
“The possibility of a fee increase can be a little unnerving,” said 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.”
According to the poll, condo buyers think the most important features when deciding on a condo to buy are: good building security (94 per cent) and low condo fees (94 per cent), energy-efficient building features (92 per cent) and attractive interior design (92 per cent), a balcony (90 per cent), parking for their car (87 per cent), and close to public transit (84 per cent).
Many condo buyers see condos as an affordable alternative to renting. Twenty-nine per cent said owning a condo is cheaper than paying rent. But, one-quarter said 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,” said 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.”
Almost one-third of condo buyers said the main reason for their condo purchase is that it is a good investment.
Of those who are buying condos that will not be their primary residence, 46 per cent think they are a good investment to buy and sell at a profit when prices have gone up. Almost an equal number at 42 per cent see them as a long-term source of rental income, and 38 per cent see them as a source of rental income until they are ready to downsize and move into the condo.