According to the annual TD Canada Trust Condo Poll, those wishing to live in Vancouver, one of Canada’s most expensive real estate markets, are choosing to buy condos. Nearly two thirds (62%) say their main reason for purchasing a condo is that it’s more affordable than a house. Around 34% believe owning a condo is cheaper than renting.
The TD Canada Trust Condo Poll surveyed Vancouver residents who had recently bought, or who intended to buy a condo. More than a third feel owning is cheaper than renting, but 28% of those living in Vancouver condos save their monthly strata fees make it feel as if they are still paying rent. This proportion is busy saving up to buy a home where they don’t have too a set monthly maintenance fees.
Brett Currah, District Vice President, TD Canada Trust says that “Purchasing a condo allows you to build equity rather than continuing to pay rent as you save for a house. 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.”
The poll found most Vancouverites were well aware condo fees can increase at any time, with 28% saying they already have a buffer built into their current budget, while another 36% say they can cut back in other areas should strata fees increase. This is probably just as well, as new regulations announced in 2011 under the Strata Property Act will impact depreciation reports and contingency reserve funds.
There’s a chance some corporations may need to contribute more to their contingency reserve fund to better manage the future maintenance of common property, resulting in higher strata fees for residents. Anyone considering buying a condo needs to take this into account when budgeting, especially if they’re buying a strata unit that is older, or which currently has quite low fees.
Currah went on to say, “The possibility of a fee increase can be a little unnerving. While there is 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. 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.”
According to the poll, features buyers consider to be important when looking for a condo include good building security, and attractive interior design, energy efficient building features, and a balcony.
Most potential purchasers are not put off by recent forecasts that an oversupply of condos could cause a drop in prices.