Tag Archives: condos

Top 10 Most Expensive Condo Buildings in Mississauga

 

Back in the early 2000s, it wasn’t uncommon to hear warnings about the ongoing condo boom in Mississauga and surrounding cities.

“They’re over saturating the market,” they said.

“Their value will drop like a rock soon and people will be horrified they spent $200,000 on a box in the sky! They’ll be lucky to sell it for $100,000!”

Now, in 2018, it doesn’t look like the condo market experienced the dreaded crash that naysayers insisted developers were tempting with every new build.

In fact, some condo buildings feature very costly units.

As low-rise home prices have gone up, so has demand for more affordable condo units, which have become the new “starter home” in many corners of the GTA.

Toronto-based real estate brokerage and website Zoocasa says that Mississauga is a particularly popular buying destination, offering good value as well as return on real estate investment.

Zoocasa says that, over the last year, Mississauga condo prices rose 5.5 per cent to $435,254.

“This has all contributed to steady demand for units – but some buildings are appreciating in value at a faster clip than others,” Zoocasa says.

To identify which Mississauga buildings fetch the most for a unit, Zoocasa analyzed sales in over 100 developments in the city, where at least five transactions had taken place, and averaging the square foot based on TREB sold data for the 2018 year to date.

Here’s a look at the priciest buildings:

Naturally, some of the most expensive buildings—North Shore, Number 1 City Centre Condos, Pinnacle Grand Park and Limelight—are centered around Square One.

According to Zoocasa, units in these buildings can cost up to $674 per sqaure foot.

“Immediate takeaways from the data is that the most expensive buildings are largely clustered around the Mississauga city centre, with a few closer to Lake Ontario,” Zoocasa says.

“None of the buildings were located north of Eglinton Avenue. In addition, the buildings skew newer, with the oldest one having been registered in 2004, and the majority after 2012.”

So there you have it—if you’re looking for a more affordable unit, you might have better luck with a more mature building outside of the Square One area.

Source: Insauga – by Ashley Newport on July 28, 2018

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Even New Yorkers Can’t Afford a Home in Toronto

 

There’s only a handful of cities in the world that make living in New York seem cheap for middle-income people, places like London, Sydney and Hong Kong. And then there’s Toronto, as 26-year-old JunJun Wu will tell you with a sigh.

After almost three years in New York she opted to move to Toronto for what she figured would be less-expensive housing.

“The apartments that I saw were so tiny, which was shocking,” she said. “Compared to my studio in New York, these were half the size.”

Prices have soared almost 60 percent in the last five years in Canada’s biggest city, and are up another 3 percent already this year. They’re not as high as Vancouver — one of the hottest real-estate markets anywhere — but among the world’s major cities, Toronto housing ranks as the fifth most unaffordable relative to income, according to consultant Demographia.

Severely Unaffordable

The world’s seven priciest housing markets relative to salary

Source: Demographia

Rankings are only for major markets with over 5 million residents. Price and pre-tax income are medians.

All that means is that a Canadian millennial, aged 25 to 31 with a median income of C$38,148 ($29,360), can’t buy very much housing in Toronto. Her maximum budget at that salary would be about C$193,661, according to Royal LePage. That calculation includes tougher lending rules, institutedthis year, that has reduced buyers’ purchasing power by almost 20 percent and cooled the market.

That’s probably not even enough money to purchase the garage of a detached home in the Toronto region, where the average price was C$1.05 million in May, according to the Toronto Real Estate Board.

Rents are no better, having soared about 11 percent to an average monthly C$2,206 ($1,697) in the first quarter from a year earlier, according to researcher Urbanation. That’s if you can find a unit: the number of newly completed condos available dropped to 1,945 over that time frame, the lowest in more than eight years.

Angie Mosquera, a 23-year-old software developer, saw up to 30 different units in recent months but kept getting outbid.

“I was so frustrated by the whole process,” Mosquera said. “I was like screw this, I’m going to be 40 and living at home, and I don’t even want to live in Toronto anymore.”

She eventually found a tiny studio downtown for about C$1,620 per month, meeting her budget. Still, the rent eats up a huge chunk of her salary, which is especially frustrating because she moved to Toronto from Montreal for a 40 percent bump up in pay.

Penthouse Condo

Stephanie and Justin Wood

Source: Justin Wood

Even those with more resources find it tough. Three years ago, Justin Wood and his wife Stephanie bought a three-bedroom penthouse condo for about C$430,000. Its price surged by about C$181,000 and this year they decided to upgrade to a house, with a toddler in tow.

“We thought we were going to be rich and it was going to be amazing,” said Wood, 33, who is now chief executive officer of his own Toronto-based tech startup. “But then we were like ‘Oh wait, we have to buy something.’”

As living in Toronto proved to be too expensive, the Woods headed for the suburbs and ended up purchasing a three-bedroom detached house in neighboring Oakville with a pool for about C$800,000. Monthly mortgage payments are about C$3,400. The commute is around two hours.

After spending almost a month in Toronto looking at about 40 listings, JunJun Wu, a college-prep counselor originally from Montreal, finally found a studio to rent in downtown Toronto through an online listing. She’s relieved that she secured a lease but the experience has left her unnerved.

“Maybe I should’ve gone back to Montreal instead,” she said. “I’m thinking I’ll give myself maybe one or two years in this city to see.”

Source: 

 

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Mississauga condos becoming an increasingly popular purchase option

Mississauga condos becoming an increasingly popular purchase option 

A new analysis from brokerage and real estate information portal Zoocasa showed that Mississauga is increasingly seen by starter home buyers as a reasonable destination away from the overheated Toronto market.

Mississauga’s average condo prices saw a 5.5% increase over the last year, up to $435,254. In its report, Zoocasa stated that the highest-priced condos and buildings – many of which saw double-digit positive value changes – were mostly situated around the city center, with some veering closer to Lake Ontario.

“None of the buildings were located north of Eglinton Avenue,” according to the Zoocasa report. “In addition, the buildings skew newer, with the oldest one having been registered in 2004, and the majority after 2012.”

Read more: Toronto’s monthly rents saw a sharp upward spike in Q1

Analyzing sales in over 100 developments where at least 5 transactions occurred over the past year, and averaging the square foot based on TREB sold data for the year to date, Zoocasa ranked the most valuable condo buildings in Mississauga as of present:

Rank 5: One City Centre

Location: 1 Elm Dr.

2018 price/sq. ft.: $584

2017-18 change: 20.5%

Rank 4: Limelight

Location: 365 Prince of Wales Dr.

2018 price/sq. ft.: $599

2017-18 value change: 14.7%

Rank 3: Pinnacle Grand Park

Location: 3985 Grand Park Dr.

2018 price/sq. ft.: $610

2017-18 value change: 20.1%

Rank 2: No. 1 City Center Condos

Location: 33 Elm Dr.

2018 price/sq. ft.: $610

2017-18 value change: 10.3%

Rank 1: North Shore

Location: 1 Hurontario St.

2018 price/sq. ft.: $674

2017-18 value change: 7.4%

Source: MortgageBrokerNews.ca – by Ephraim Vecina 28 May 2018

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Is a rental property a good investment?

Q:  I own a condo in my hometown of Duncan, BC, but my partner and I have just bought a house across town and have moved into it together. Should I keep the condo as a rental property or sell it and invest the equity?

Every time I ask friends or family what I should do with the property, they tell me I should keep it because ‘property values keep going up and one day, I’ll just own it!’ But my rental income wouldn’t cover my cost for keeping the condo and I feel like sinking money into the unit every month just to keep it afloat is a bad idea, no matter what the long term gain might be.

The two-bedroom condo was built in 1993 and it’s in a highly rentable part of town (most units in the area are renter-occupied). I think I could charge about $800/month for it. Vacancy rate is pretty low here, so I probably wouldn’t have too much trouble finding a tenant. The building is well maintained (I chair the strata council) and has a solid contingency reserve. I expect strata fees to increase at a rate of about 2% per year for the foreseeable future.

—Harmony

A: One of the best things about investing in real estate is that it is generally much more empowering than investing in stocks. Stocks are difficult for a lot of people to understand, whereas real estate can be more intuitive.

It helps to understand what you’re investing in and when it comes to a property you’ve already lived in and a neighbourhood you know, I can appreciate the appeal, Harmony.

I prefer condo investing over detached houses, because condo expenses are pretty predictable. Expenses for a house can be a lot more sporadic.

I think that real estate investors are probably better off focusing on cash flow than capital appreciation. In other words, avoid owning on speculation to sell the property in the short-term for a profit. You appear to have a long-term cash flow approach, Harmony, but the cash flow–or lack thereof–seems to be a cause for concern.

A property that runs cash flow negative can still be a good investment though, so I think you need to consider why the rent won’t cover the costs. Do you have a short amortization on your mortgage? You may be able to reduce your costs by extending the amortization on the mortgage back to 25 years so that the property runs neutral or positive.

 

I like to project the after-tax cash flow and net equity for a rental property over a number of years in order to fairly evaluate the property. To me, this is a true representation of the investment, rather than simply looking at the cash flow in isolation or speculating on the appreciation in the property value.

If a property runs cash flow negative, you may be able to claim a deduction on your tax return that leads to a tax refund. I say “may” because the mortgage principal is not tax-deductible and once you back that out, your property might be running cash flow positive for tax purposes, Harmony.

After you have determined the tax implications of your rental property’s cash flow, you need to consider the change in the net equity. If your property is running cash flow negative by $2,000 after-tax annually but you’re paying down your mortgage principal by $4,000 annually in the process, that’s an important consideration.

But does that mean you’ve invested $2,000 and earned $4,000? Not really. You also have to take into account how much equity you have tied up in the property. In other words, if you have $48,000 in equity in the property and you’re cash flow negative $2,000, you’ve made a $50,000 investment to earn $4,000. That’s an 8% return. Add in a bit of property value appreciation and you might have a double-digit return (at least on paper) in this notional example.

On the other hand, are the rents just not high enough in the neighbourhood to justify the carrying costs on the property? It may just be a renter’s market. In some cases, the all-in return on a rental property just isn’t enough to beat out other alternative investment options. If the condo proceeds could enable you and your partner to put down a larger down payment on the house and avoid CMHC insurance premiums, or provide cash to make an RRSP or TFSA contribution, I think you need to be sure the cash flow/net equity return is enticing.

The point is, you can’t just focus on top-line cash flow for a rental property. Dig deeper, consider the tax implications, mortgage principal repayment and your existing equity.

And while I hate to be a pessimist, the realist in me can’t help but point out that your condo represents a reasonable back-up plan in the event things don’t work out with your partner. Also keep in mind that after two years of cohabitation, the same laws that apply to married couples apply to common law couples in B.C. when it comes to a division of assets. In your case, you may both be entitled to half the house as well as half the appreciation during your relationship on your condo. So consider a consultation with a family lawyer as well.

Source: MoneySense.ca –

 

by 

Jason Heath is a fee-only, advice-only Certified Financial Planner (CFP) at Objective Financial Partners Inc. in Toronto, Ontario. He does not sell any financial products whatsoever.

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TORONTO CONDO MAINTENANCE FEE STUDY 2017

Toronto Condo Maintenance Fee Study 2017

 

How much are you paying each month in condo maintenance fees and what do those fees truly pay for? If you don’t know the answer to that question, you might want to read this study.

Maintenance fees (MF) are a constant topic in condo real estate, both during your search process and once you own a home. Back in 2015, we released a study that revealed the truths and myths behind maintenance fees in Toronto condos. But two years is a long time, especially in today’s real estate climate, so we’ve come back with our Maintenance Fee Report 2.0.

 

But first, a bit of maintenance fee 101

 

Every homeowner will pay maintenance fees in one form or another. Whether you have a freehold house or a condo apartment, a homeowner’s maintenance fees cover a wide range of home upkeep costs from lawn care to roof repair.

For a freehold house, the everyday upkeep costs will vary from year to year, depending on the condition of the house and whether there’s a need for sudden repairs. Unexpected costs are the most common worry with owning a freehold house. When a pipe bursts or the furnace quits, you can be hit with a sizable bill.

For condos, the maintenance fees tend to follow the rate of inflation, acting as a fund for the on-going upkeep of your unit and building in a range of ways. That fund, if managed well, can keep unexpected costs away for good.

That’s the key benefit of the structure of condo maintenance fees over freehold: the potential to remove sudden, unexpected costs.

It’s not surprising that there are a lot of misconceptions surrounding condo maintenance fees. In this report, we’ve picked the most common concerns that our Condo Pros hear from clients and broken them down into true or false answers.

 

1. Maintenance fees have no legal increase limit

 

TECHNICALLY TRUE

 

There is no legal regulation regarding the amount that a condo building’s maintenance fees can be increased annually. There is a general rule that maintenance fees increase to adjust with inflation and/or the needs of the building. Condo corporations are non-profit entities made up of unit owners within the building, not an outside group. The cost of operation adjusts for the true cost of maintaining the building. The condo board members who may vote to raise maintenance fees are in the same boat as all other owners in the building.

 

 

 

 

 

 

 

 

 

 

 

 

2. Lower maintenance fees mean lower monthly costs

 

FALSE

 

Maintenance fees cover different elements from building to building. Some buildings include the cost of water, heat, hydro, insurance, and other elements in the maintenance fees. Others may not. If those elements are not included in the maintenance fees, you will have to pay them separately. That’s why it’s important to know exactly what your maintenance fees cover. A low maintenance fee does not necessarily mean low monthly costs.

The maintenance fee that includes water, heat, hydro, and A/C is obviously more expensive, but these elements must be paid regardless. If you’re paying for these elements separately, the total monthly costs could be much higher than if they were included in the maintenance fees.

 

3. Smaller boutique buildings are less expensive than high-rise towers

 

FALSE

 

Condo building maintenance fees depend on a lot of factors. At the top of the list is the building’s footprint and the number of units. Between two buildings of a similar footprint, it doesn’t matter if the buildings are five-storeys or forty. It will cost the same amount to maintain and repair the roof. That cost is dispersed across the units. The more units, the broader the dispersal; and the lower the fee for each individual unit.

Building amenities are another key contributor with a range of factors. But it still has to do with the number of units. A concierge service shared between ten boutique units will be more expensive per unit compared to a concierge shared between 400 units.

Between two buildings of a similar footprint and similar amenities, the one with more units will tend to have lower maintenance fees. However, the building with more units will have a higher opportunity for wear and tear of common elements, which might in the long run cost more to maintain.

 

4. Maintenance fees always spike within 3-5 years for new buildings

 

TRUE AND FALSE

 

Every building is managed differently. Builders often market new buildings with low maintenance fees to make them more appealing to buyers. Once the condo board takes over, it is common to see fees undergo slight increases as the board fills out the reserve fund. After an initial increase, however, fees should stabilize. In the case of well managed properties, maintenance fees even come down. For instance:

 

Toronto condos maintenance fee decreases

5. Low maintenance fees are a sign of value

 

FALSE

 

Maintenance fees should be priced in accordance with the true cost of operating and maintaining the condo building. If that true cost is low, and the maintenance fee is low, then great. But if maintenance fees are low for the sake of attracting buyers, and are not adjusted to the true costs, then you could run the risk of a mismanaged reserve fund.

A better sign of value is smart building management. The maintenance fees fill the reserve fund and are used for big repairs, upgrades, etc. If a building is poorly managed, the reserve fund may deplete, at which point the condo board will have to issue “special assessments.”

During the condo search process, however, you may still want to look for buildings with low maintenance fees as a means of maximizing your purchasing power. With a lower all-in monthly maintenance fee, you can allocate more of your monthly budget towards a mortgage payment, thereby increasing the size of the mortgage you can carry. Just be mindful of the building’s true operating costs.

 

6. Cost of Parking Spot and Locker are included in maintenance fee

 

FALSE

 

Parking spots and lockers are often separately titled properties, which means they have their own maintenance fee attached to them. If your parking spot or locker is separately titled, then you have to pay a separate fee on top of your condo maintenance fee.

 

Source: via Condos.ca as of Jan 4, 2018. All data is for 2017 unless otherwise noted.
Disclaimer:
Condos.ca has worked diligently to ensure the accuracy of this information and our calculations including the removal of any small samples and data anomalies that could skew results. However, we cannot guarantee the information with 100% certainty due to factors including but not limited to potential incorrect information entered by listing brokerages or agents on MLS. This information and the views and opinions expressed here are intended for educational purposes only. Condos.ca accepts no liability for the content of this study.
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HOW TO BUY A TORONTO CONDO IN 2018: NEW RULES + TIPS

How to Buy a Toronto Condo in 2018

Whether you’re a first-time buyer or a seasoned investor, there are new rules in 2018 that you will want to understand if you plan to buy a condo in Toronto. In this blog post we are going to explain the new rules and give you some tips to navigate them.

The 2018 condo market at a glance:

How to Buy a Toronto Condo in 2018, average price for condos

What are the new rules and changes?

 

We spoke with James Harrison, President of Mortgages.ca, to give us a full understanding of what to expect this year.

The new rules are simple:

As of January 1st, 2018, the Bank of Canada’s “Universal Stress Test” is in effect.

The buyer must now qualify for their mortgage based on the 5yr posted rate (4.99% today) or their contracted rate plus 2.00%, whichever is greater.

 

What does it mean for buyers in 2018?

 

“In my opinion, this will negatively impact one’s buying power by approximately 15-20% on average,” says James Harrison.

This stress test is an expected addition to the federal government’s measures to limit over-leveraged buyers from entering the housing market. In February of 2016, the federal government raised the minimum down payment from 5% to 10% for properties between $500,000 to $1 million. As we discussed in a previous blog post about those down payment rules and changes, the aim was to “reduce taxpayer exposure and support long-term stability.”

In October of 2016, a first round of stress tests was introduced to target insured mortgages (borrowers with less than 20% down payment). These borrowers were required to qualify at the Bank of Canada’s posted rate, which was 4.64% at the time, in hopes of creating a buffer against over-leveraged home purchases.

The newest round of stress tests is also about creating a buffer zone, but it applies to uninsured mortgages (borrowers with 20% down payment). Effectively, everyone applying for a loan through a regulated lender will now be stress tested. In a previous post, we explained in plain words how your buying power may change under the new mortgage rules.

“This will have a huge impact on some buyers but not all,” says James Harrison. “I believe this will negatively affect first time buyers as they tend to have lower incomes and also carry some debt from school. With one’s buying power negatively affected by 15 to 20% you would think this will mean prices will come down. I would be surprised if prices came down more than 5% in 2018.”

“For the well qualified buyers (those with higher incomes and little to no debt) 2018 will most likely see less competition, which could mean more of a buyer’s market. We have not seen this in a very long time in the GTA.”

“If you purchased a property prior to January 1st, 2018, you can still qualify for a new mortgage based on the old mortgage rules (with some lenders). Some top Brokers may also have lenders that can still qualify clients under the old rules (or at least using the discounted 5 fixed rate of 3.29% for example) and a 25yr amortization. This can increase one’s buying power by about 10- 15%.”

“If a buyer bought a property (same for pre-construction) prior to October 2016 (they could also qualify for an insured mortgage based on the rules prior to the first stress test for insured buyers). This is a huge benefit for some buyers of pre-construction units.”

 

What to do if you’re not approved for a mortgage under the new rules?

 

“If a buyer no longer qualifies to purchase a property they want they may have to look for a strong co-borrower to sign on to the mortgage to help increase the income and bring the debt services ratios in line.  Unfortunately, this may mean a lot more potential buyers will now be looking for a rental property, which in itself is already very challenging in Toronto.”

Alternatively, there are mortgage lenders that operate outside The Office of the Superintendent of Financial Institutions (OSFI). The ‘stress-tests’ apply only to lenders that are regulated under OSFI, such as the Big Five banks, while some second-tier banks and credit unions fall outside the new rules. These lenders have often been painted as “shadow lenders,” but they do fill a gap in the home buying process.

For buyers who don’t approve under the new mortgage stress tests, these non-regulated lenders can be a viable option and many of them offer rates competitive with top tier banks. One thing to keep in mind, however, is that non-regulated lenders are still hoping to limit risk, which means they tend to prefer borrowers with strong credit history. If your credit is weak, you may face higher rates on your mortgage. As always, it’s best to do some research.

“It is more important than ever for each and every buyer (or anyone looking for a mortgage) to connect with a very experienced Mortgage Broker. Going to your local bank branch is simply not a smart option anymore and has not been for years, but the new stress test will show this even more. A good Mortgage Broker will be able to help explain this fully and find you more options.  Even if you are a well-qualified buyer you may not qualify with your bank but you may still qualify for excellent schedule A products with another lender.  Do not give up until you speak with a good broker.”

 

Why is the government implementing these new mortgage rules?

 

“The reality of these most recent mortgage rules is that the federal government has serious concerns with the level of personal debt loads in Canada. So, they are continuously coming out with ways to help make sure everyone can truly afford the mortgage they are taking on. I personally feel this was too much, and I would not be surprised if the government is forced to pull this back within the next two to three years.”

“I am optimistic that 2018 will still be a strong year in real estate, but realistically a lot of buyers may be out of the market completely. I expect that 2018 will most likely be the year of mom and dad providing the down payment and co-signing for the mortgage as well.”

“I strongly encourage each and every buyer to contact a well-qualified and experienced mortgage broker for all of their mortgage needs, whether it is a purchase, refinance, or renewal.”

Source: Data sourced via Condos.ca on Jan 4, 2018

 

 

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Is it cheaper to buy a house than a condo in the GTA? This expert thinks so

While many first-time buyers look to condos as a relatively affordable option, one Toronto housing market expert says that it is actually less expensive to buy a low-rise home in the GTA.

According to Realosophy Brokerage co-founder John Pasalis, when you control for the size difference between low-rise and condos in the GTA, condos are more expensive per-square-foot.

In the Maple neighbourhood of Vaughan a 1,385 square-foot rowhouse costs $685,000, while a condo of a similar size in the area would likely cost $684 per-square-foot, or $947,000. It’s just one example of a price difference that can be seen across markets in the GTA.

Pasalis believes that this discrepancy in prices can be chalked up, in part, to investor demand.

“The majority of new condominium construction is driven by investor demand — not demand from families,” he writes in a recent blog post. “Investors are willing to pay much more (on a per-square-foot basis) than end users are.”

Pasalis says that investors prefer smaller units, which typically have a better return on investment, which means that developers are creating units that are too small for families, at prices they cannot afford.

“When developers are pricing a unit, they’re thinking to themselves, why would I charge this much when I can get this much?” Pasalis tells BuzzBuzzNews. “And those prices don’t make sense for a two- to three-bedroom unit, which is likely why we’re not seeing as many of those units being built [in the GTA.]”

In order for a condo to be good-value-for-money for a young GTA family, Pasalis says that low-rise prices would have to increase at a much faster rate than they currently are.

“The rate of appreciation for low-rise homes in the 905 region isn’t going to be very high in 2018,” says Pasalis. “So I don’t see this trend changing in the next year or so.”

While Pasalis admits that for families with a budget of $400,000 or less, a condo may be the only option for homeownership, he says that those with one of $700,000 or more should consider their options.

“They can choose to buy a two-bedroom 1,000 square-foot condo in Maple for that price, or a three bedroom 1,385 square-foot row house with a finished basement and backyard. For most, it’s a pretty simple choice,” he says.

Source: BuzzBuzzHome.com –  

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