You’ve worked hard to save money and you’re finally ready to pull the trigger on buying your first home. As a first-time buyer in Toronto, do you buy a house or a condo? There are many things to factor into the equation, from lifestyle to financials. We help weigh the pros and cons of buying a Toronto house versus condo so you can set your expectations and feel well-informed as you prepare to buy your first home.
EVALUATE YOUR LIFESTYLE
Your lifestyle will be a huge factor to consider when deciding what property is best for your first home. Let’s start with location.
As a first-time buyer, let’s presume your max budget is $750,000. In Toronto, you’re generally restricted to neighbourhoods like East York and St. Clair West Village to find a house for under $750,000. For a more in-depth look at home prices, read The Cost to Buy a Semi-Detached Home in Toronto by Neighbourhood.
Comparatively, when buying a condo you have far more choice across the city within the same budget. Whether you’re after something in the downtown core or a more laid back neighbourhood, buying a condo will give you more to choose from and less to compromise on.
Recap: If you want a house, you’ll need to be flexible on location.
If you’re seeking a low-maintenance life, condos are your best bet. While condos require you to pay monthly maintenance fees, you can ditch your winter shovel along with any concerns about whether or not your roof is still in good standing. All you need to worry about is the few hundred square feet you call your own.
If you’re thinking you’d rather DIY than pay monthly maintenance fees, think again. Toronto homeowners should expect to put at least 5% of their monthly mortgage into an Oh Sh*t Fund. With most houses in Toronto being 50+ years old, it’s important to have an emergency fund for things like routine maintenance and larger repairs — like a leaky roof or malfunctioning furnace — is a must.
Recap: Both houses and condos come with “maintenance” fees.
CONVENIENCE VS. SPACE
Living in a condo means you have access to amenities. These will vary per property but can translate to monthly savings. Save on a costly gym membership and even gas on trips to the grocery store. Many condos will have a grocery store attached to the building or within walking distance.
The convenience of condo living may be substituted for extra living space. You’re more likely to get a bit more living space and outdoor space when buying a house. You can still find condos with large square footage and terraces, but they will cost you more.
Recap: Know your priorities — convenience or space.
While condos are plentiful, they’re also the more affordable option among first-time buyers which means you’ll likely be competing with other buyers. Based on 29 condos that sold in downtown Toronto in the past three weeks, the average sale-to-list price was 103%. Translation: expect most condos to sell for over their list price.
As we mentioned earlier, finding a house within your budget will limit you to certain areas. You’ll be hard pressed to find a house in Toronto under $750,000 that won’t require renovations. If a move-in ready house does hit the market within your budget you can expect the competition to be fierce.
In the last 30 days, only six houses have sold under $750,000 in Toronto, many of which needed major renovations or complete overhauls.
Recap: Competition is high for first-time buyers so expect to lose a few times before you win.
HOW DO HOUSES VS. CONDOS COMPARE FINANCIALLY
Let’s compare the monthly expenses for two recent sales, both with similar list prices and rooms. This detached home is relatively move-in ready but you would need to budget $15,000 – $20,000 in upgrades and renovations.
Condo: 140 Bathurst St PH09 | 2 bed | 1 bath | parking
Neighbourhood: Downtown Toronto
List Price: $659,000
Sale Price: $692,000
Detached House: 16 Cassels Ave | 2 bed | 1 bath | parking
Neighbourhood: The Beaches
List Price: $659,900
Sale Price: $680,000
If you’re debating between a home or condo you can run the numbers with this mortgage calculator. Be sure to check “I am a first-time home buyer” to calculate your Land Transfer Tax rebate and click here to see if you meet the first-time buyer requirements for the rebate.
LONG TERM OUTLOOK
When buying your first home, you need to consider your long-term goals. If you’re buying for equity gains in hopes of reselling in a few years, it’s important to have your real estate agent advise you on projected market value.
Where you buy and what you buy will dictate how much equity your property will likely earn. For instance, looking at our above comparable, condo prices in downtown Toronto (C01) rose 11% in 2018 while prices for detached homes in the Beaches (E02) dropped 1.5%.
The point here being that the equity you’ll earn buying a condo in downtown Toronto will generate better gains than that of a house, but this will depend on your location and how the market has been performing. You can stay up to date with local market stats each month with this Toronto real estate Market Report.