30 May How do I buy a condo in the GTA?
It’s pretty common knowledge that the major urban areas in Canada and surrounding areas face a housing crisis. Prices are high and entering the market is difficult. In Toronto and the surrounding area (Mississauga, Oakville, Burlington, even Hamilton), as prices for freehold single detached homes have increased buyers are looking for more affordable alternatives and developers are looking to maximize the number of housing units they can put on the scarce land available.
In this millennial realtor’s opinion, the starter home of our grandparents’ and parents’ generation is gone. So many times I’ve heard people say they would love “just a small house”. But the unfortunate reality is that even small bungalows push the budget for many young families and first time buyers. Now, condos are shifting to take that slot of an initial starter home. Your stepping stone into the market. For the millennials and Gen-Zs in Toronto, Oakville, and Burlington looking for how to break into the market, buying a condo could be your answer (either re-sale or new construction).
What is a condo?
When people say “condo” they tend to think of condominium apartments. However, it’s important to know that when it comes to condos, it’s not limited to “box in the sky” units. You can have condo townhouses, condo detached homes, and, of course, condo apartments. When a home is a part of a “condo”, it really means that it is part of a non-profit condominium corporation that collects funds from all owners to maintain the common areas and other shared expenses. For more about the difference between condos, road fee homes and freehold homes, check out my previous blog post. Homes that are part of a condominium are often subject to a number of rules about property maintenance and standards (e.g. restrictions on pets, décor selections like window coverings/front doors/exterior finishes/landscaping).
What are the benefits of buying a condo?
Condos can offer a number of benefits! Often, they are at a more accessible price point. It can make a condo a great option for first time buyers or anyone on more of a budget. The condo fees also mean that homeowners don’t need to necessarily set aside a large home maintenance fund – the condo corporation takes care of that. Condos offer a number of lifestyle benefits as well. Amenities at your fingertips, security staff in a building, and maintenance-free living are all some of these benefits!
As an added benefit, there is a lot of condo construction happening in the GTA. If having something new or having a say in the finishes of your home is important to you, a pre-construction condo may be exactly what you want.
What are some downsides of buying a condo?
Condos mean community living. There can be extensive rules for your condo and what you can do with your unit and your lifestyle. Restrictions on noise, pets, and activities (barbeques, smoking, etc). Buyers should be aware of how rules may impact their day-to-day lives before buying.
Should I find a Realtor who is experienced in condos?
There are some aspects of a home purchase that are unique to a condo, so having a realtor who understands what questions to ask is important. Status certificates, reserve fund, special assessments, and typical condo restrictions are all things your realtor should have familiarity with. When you are interviewing your prospective realtor (or realtors), ask them about their experience with condos. Have they helped many people buy a condo before? Do they have experience with pre-construction condos in the GTA? What advice do they have for you as a condo shopper? Etc.
How can I get financially approved to buy a condo?
It’s important to let your lender or broker know you intend to buy a condo when you get a pre-approval. When your lender looks at your finances, they consider your overall financial picture, so any obligations you have impacts your approval. This includes condo fees! The amount you are approved for a freehold home and a condo will differ, and your lender should account for this from the get-go. If you are buying a pre-construction condo, the process can be a little different depending on how far out from completion you are purchasing. Your realtor or the builder can help guide you on this.
How can buyers learn more about a condo corporation before buying?
Reviewing a condo corporation’s status certificate is the first place to look. It’s a collection of documents outlining the condo corporation’s finances – spending, projected budget, savings, etc., as well as all the rules and regulations of the condo. Second, I’d recommend speaking with the property manager directly if you have any specific questions (like clarifying a pet restriction). Finally, see if you can find any community groups online for the condo or speak to the neighbours. It’s a good way to gauge the first-hand experience of the condo’s residents. New construction won’t have a status certificate (as they won’t have a corporation before being built), so have a lawyer review the builder contracts to ensure you know what you are buying.
What should buyers know about condo fees before buying?
The condo fee for each corporation will vary, as well as what is included in the fee. You’ll want to consider all inclusions when comparing properties.
Some properties may include water, heat, A/C, hydro, cable TV, visitor parking, common areas and landscaping, security staff and concierge, building maintenance and repairs (which may include the roof, windows, foundation), amenities (which may include a pool, gym, party room, business center, rooftop bbq, etc.). As a rule of thumb, the more your condo includes, the higher your monthly fee will be. Get even more details about condo fees.
Top 3 Tips for Buying a Condo in Ontario
I have three main considerations that I advise my clients looking to buy a condo in the GTA:
One is financial – find out if the condo has any upcoming special assessments. These are large, one-off payments that the condo owners need to contribute to the condo corporation for major repairs. They can be in the thousands of dollars, so it’s important for buyers to know what they are getting into. Think something costly like window replacements in an entire complex.. Well-run complexes should have what’s called a reserve fund set aside for major expenses, but some complexes with either unusual repairs or poorly run management may have to issue special assessments.
The second is about your intended use. If you are planning to purchase as an investment, like an Airbnb or rental, you should ensure that this is something you are even allowed to do.
The final one: pets. Pets are “family” more than ever before, and you need to ensure that the condo you are buying into has pet policies that align with your personal situation. Condos can have a range of pet restrictions. From the type of pet permitted (including breed!), to the number of pets, weight of pets, registration, noise rules, etc. Check before you buy to avoid any issues.
Looking to buy a condo? Just have questions about the market or your personal real estate goals? I’m happy to chat anytime, just reach out.