If you’re a first-time buyer and don’t know whether to start with a condominium or a low-rise home as your first humble abode, you are not alone, says our columnist.
There are more than a few people who begin their new home search while considering both condos and houses. If you are, or could be, one of these people, you should be aware of the differences in the market between the two. These days, the differences between purchasing a condo or a house are more magnified.
Right off the bat, the lifestyle of condo living versus house living is quite different. Location-wise and actual lifestyle-wise, each type of home has its advantages and disadvantages. Demographically speaking, for the young professionals’ market, condos/lofts/ towns are most popular. Quite often, they are the only affordable type of housing for a young person/family starting out. Of course, the condo also comes with other perks, like less responsibilities as a homeowner, relatively speaking, and chances are the convenience and attractions of the area will outweigh the same for a house — ie., downtown Toronto versus say New Markham.
On the other hand, buying a house in the suburbs, while more expensive for many, gives you more space, better appreciation value, and that general feeling of suburbia that comes with a white picket fence.
Yes, indeed — the differences between a condo and a house are many, but for buyer Al, who has done his research and is an intelligent buyer, what I’ve discussed so far seems like common sense. I’d have to agree with Al, in that these differences aren’t the most important to keep in mind.
Consider that this June, 50 per cent of condos sold in downtown Toronto sold for at or above list price. Compare that with only nine per cent of homes in New Markham over the same time span. What does this mean for buyer Al? It means that buyer Al needs a different mentality depending on whether he’s shopping for a condo or a house — specifically, if he’s looking for a condo, a newer mentality is what he needs.
In other words, if Al is looking to buy a nice unit in a nice building in nice downtown Toronto, he needs to understand that there are dozens of other buyers who will love the same unit he does. Al needs to recognize that sellers are purposely pricing their units a little bit below market value, holding offers until a certain date, generating as much interest as possible and then routinely getting multiple offers on their properties.
In a multiple-offer situation, make no mistake, the seller is in total charge. Does this mean that Al is doomed to pay more than market value? Absolutely not. It does, however, mean that Al is part of the current trend that is seeing prices of the newer downtown condo buildings rise, so what he pays will likely be the highest new sold comparable.
Remember: This is not an indication of above-market value but rather where the market is headed. Why is the market headed there? While Al might be cursing under his breath, the real reasons deserve an article all to their own.
So if Al is with a realtor he trusts and is comfortable with the multiple offer situation, then he is ready to cash in on the condo of his dreams, and also on the appreciation that is, logically, sure to follow.
If not, he would do better to consider the world of housebuying, or break the mould and go shopping for a home as part of his Christmas shopping list.
For help with your real-estate needs, feel free to contact Amit at amitp@rogers.com.
