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More affordable than a house: Condos seen as an attractive option in Vancouver's expensive real estate market
- Affordable housing is a priority for Vancouver residents according to annual TD Canada Trust Condo Poll -
VANCOUVER, April 18, 2012 /CNW/ - Attracted to an urban lifestyle in one of Canada's most expensive real estate markets, nearly two-thirds (62%) of Vancouver condo buyers say their main reason for buying a condo is that it's more affordable than a house. Another third (34%) say they believe owning a condo may be cheaper than paying rent according to the 2012 TD Canada Trust Condo Poll, which surveyed Vancouver residents who recently bought or intend to buy a condo.
More than one-quarter (28%) of Vancouver condo dwellers say that their monthly strata fees make it feel like they are still paying rent, so they are saving up to buy a home without set monthly maintenance fees.
"Purchasing a condo allows you to build equity rather than continuing to pay rent as you save for a house," says Brett Currah, District Vice President, TD Canada Trust. "At the same time, determining what makes the most sense financially is not just a straight comparison of your monthly rent and some utilities to a monthly mortgage payment and condo fees, so it's important you talk to a mortgage expert before making the decision to buy a condo."
According to the poll, Vancouverites tend to be conscious of monthly maintenance fees. Vancouver condo buyers say they understand that monthly fees can increase at any time and have a plan: 28% have a buffer built into their current budget and 36% say they could cut back in other areas in the event of an increase.
Vancouver condo dwellers may be wise to prepare their finances for the possibility of a maintenance fee increase. New regulations announced last year under the Strata Property Act will impact depreciation reports and contingency reserve funds. Some corporations may need to contribute more to their contingency reserve fund to better manage the future maintenance of common property and it is possible that this could result in higher strata fees for their residents. For people buying condos, these changes may help to budget - as it will help predict the likelihood of a strata fee increase if they're considering a strata unit that is older or currently has unusually low fees.
"The possibility of a fee increase can be a little unnerving," says Currah. "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 Vancouverites 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."
Top features Vancouver residents look for in condos
According to the poll, condo buyers think the most important features when deciding on a condo to buy are:
- Low condo fees (97%)
- Good building security (96%)
- Attractive interior design (95%)
- Energy-efficient building features (93%)
- A balcony (92%)
Nationally, women are more likely than men to look for a building with a balcony (92% versus 87% of men) and environmentally-friendly features (86% versus 79% of men), while men are more likely to say finding a brand new condo - not a resale (56% versus 46% of women) - is important to them.
Condos as investments
Almost one-third of condo buyers (31%) in Vancouver say the main reason for their condo purchase is that it is a good investment. Recent housing forecasts do not seem to have fazed most buyers. Only 21% of condo buyers in Vancouver say recent forecasts have made them less likely to buy a condo.
"Recent housing forecasts have predicted that an over-supply of condos will cause a drop in prices. How this affects your decision to purchase a condo comes down to your goals at that time" says Currah. "If you are buying a condo and see it as a source of rental income that you'll move into when you are ready to downsize, this drop in value will likely not have a big effect. On the other hand, if you see a condo purchase as a way to build equity as you save up to buy a home, you need to consider the potential effect of a decreased price when you sell on the money you will have towards a down payment for a house."
Of those who are buying condos that will not be their primary residence, 39% think they are a good investment to buy and sell at a profit when prices have gone up. But - that is not the only way Vancouver residents see a condo purchase as an investment. More than half (55%) see them as a long-term source of rental income and 37% see them as a source of rental income for now that they will move into later when they are ready to downsize.
TD hosts an online community for homebuyers at www.tdcanadatrust.com/homeownership. The online community allows home buyers to learn from each other's experiences, share stories on a wide range of home financing topics and pose questions to TD expert, Farhaneh Haque, Director of Mortgage Advice.
About the TD Canada Trust Condo Poll
TD Bank Group commissioned Environics Research Group to conduct a custom, online survey of 1,453 Canadians, 18 years of age or older, in Vancouver, Calgary, Toronto and Montreal. Among those Canadians surveyed, 801 bought a condo in the past 24 months or are considering buying one in the next 24 months, including 200 surveyed in Vancouver. Responses were collected between January 23- February 2, 2012.
About TD Canada Trust
TD Canada Trust offers personal and business banking to more than 11.5 million customers. We provide a wide range of products and services from chequing and savings accounts, to credit cards, mortgages and business banking, to credit protection and travel medical insurance, as well as advice on managing everyday finances. TD Canada Trust makes banking comfortable with award-winning service and convenience through 24/7 mobile, internet, telephone and ATM banking, as well as in over 1,100 branches, with convenient hours to serve customers better. For more information, please visit: www.tdcanadatrust.com. TD Canada Trust is the Canadian retail bank of TD Bank Group, the sixth largest bank in North America.
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