First time home buyers are plagued with a whirlwind of decisions when looking for the perfect place to settle down. From locations to schools and public transportation, there’s one major consideration that will determine your type of lifestyle for the years to come. After coming to terms with the loads of money you’ll be borrowing, you’ll have to decide on whether you want to live in a condo vs house.
We have friends who live downtown and have quick access to all the conveniences that the city has to offer. Other friends live in 2500 sqft houses with pools and finished basements. Are there ingredients that make one better than the other? Is there a recipe that tips the scale in favour one over the other? Oh the suspense! Who takes it?
Condo vs House Debate!
A quick search of MLS in our area shows that a 2 bedroom/2 bath condo starts at around $360k. Assuming a 20% down payment, a fixed 3.5% interest rate over an amortization period of 25 years, mortgage payments would amount to $1,438/month. The total paid for the condo will amount to $431,370, which includes $143,370 of interest, over the life of the mortgage.
In the same neighbourhood, the cost of a 1500 sqft townhouse start at $650k. Using the same mortgage variables as above, monthly payments amount to $2,596. Over 25 years, the total paid would be $778,862- including $258,862 of interest.
Verdict: Condo’s can be considered as a starter home, the stepping stone to building equity before jumping into “real” home ownership. House ownership, at a minimium, comes at double the cost. With the current prices of real estate in our area, owning a house remain a pipe dream for most of those starting out.
Condo owners pay a fixed monthly maintenance fee based on the size of their units to cover the building’s operations. A portion of the fee goes towards utilities while the rest is reserved for future repairs and amenities, like party rooms, pools, gyms, and guest suites. Some fancy condos even offer tennis courts, bowling alleys and movie theaters. There a few factors that affect the condo fee, but the more amenities at the condo, the higher the fees.
The utilities associated with a house are generally lower than condo maintenance fees. House owners pay for electricity, gas and water separately based on unit rates; they can directly affect and lower the cost by controlling energy consumption.
Verdict: Condo living comes at a premium. Amenities are nice, but often go unused. Utilities paid by house owners are less than maintenance fees and efficient energy usage can result in lower bills.
Our 2 bedroom condo was the perfect size for the two of us. Our second bedroom was used as a office and we had the right amount of space. When the little bugger made his way into our lives, we had to move all our things out of the spare bedroom and make way for his belongings; our office is now the dining room table. The space still fits, but we’re on track to outgrow it.
Houses have rooms for multiple kids, offices, and guest rooms. Garages have space for second cars and bikes. Summer afternoons can be spent enjoying a bbq in the backyard by the pool. Kids can shoot hoops on the driveway.
Verdict: An argument can be made for those looking to downsize that less space is more desirable, but as far as I’m concerned, houses have more space and I want it.
Condo owners are on the hook for repairs inside their units. For the most part, that translates to changing the occasional light bulb and maybe calling someone if an appliance is on the fritz. There isn’t much else to it. Major repairs, landscaping and snow shoveling are taken care by the maintenance fees.
Homeowners not only have to take care of maintenance inside the house, but also the things on the outside. Cleaning the rain gutters, yard work and lawn care are time consuming. Homeowners are also on the hook for any unexpected expenses, from frozen pipes to roof repairs.
Verdict: If you aren’t particularly handy and don’t care to be, condo living is for you. However, condo owners may have to pony up cash for major repairs via a special assessment in poorly managed condo corporations. Home maintenance is more time consuming and can get expensive pretty quickly. This one really comes to to personal preference. We’ll call a Tie.
Condo dwellers have to live with elevators. My coworker had to hobble up 24 flights of stairs with a sprained ankle during a power outage. Bring groceries home sometimes requires multiple trips up and down. Home owners can pull right into their driveway and unload everything quickly. If you forget something in the car, it doesn’t take 10 minutes to go get it. Leaving a house for work in the morning probably takes 30 seconds. The unfortunate condo dweller with a parking spot in P4 spends much more time circling around to get out of the garage. Condo owners require board approval prior to any major renovation. Homeowners have the freedom to make whatever changes they want whenever they want.
Verdict: The only thing I can think of that’s convenient about living in a condo is that I don’t have to scrape snow off my car since it’s parked in an underground garage. Then again, a home with the a garage would net the same result. I guess condo owners don’t have to shovel the driveway?
After carefully considering the different factors, we decided instead to side with the underdog and here’s why:
Real estate in Toronto is ridiculous. “Starter” homes in the downtown core are over $1 million; the “affordable” options are still subject to bidding wards and in dire need of repair. For newlyweds, a couple years out of school, the decision was limited to two options: buy a condo or rent. A 600 sqft one bedroom apartment rental in our current area generally runs for $1600/month. We made the decision to buy after taking a good look at our downpayment amount and comparing mortgage payments to the cost to rent; mortgage payments (accelerated biweekly) came out to be less.
We made an offer on a condo of 850 sqft after seeing about two dozen properties. Emily has always contended that the space is enough and as much as I would like more space, I have not been able to prove otherwise. We could have “afforded” (read: borrowed) more- much more, but we didn’t want to be bogged down by a giant mortgage. The smaller mortgage has allowed us to reduce the repayment schedule from 25 years to a maximum of 15 while enjoying a lifestyle that allows for luxuries and travel.
We do pay steep condo fees. Our low rise building of 14 floors enjoys amenities such as a party room, pool, gym and sauna. We’ve made use of all of them and continue to do so frequently. A quick dip in the hot tub after a soccer game does wonders to loosen up the muscles.
Condo living was the option that best suited our needs. We live within walking distance of five different grocery stores, restaurants open 24 hours a day and have access to the subway system that’s only a short ride to the downtown core. Despite my first world gripes, it certainly has grown on me. Dare I say that I’m enjoying the condo lifestyle- if only just a little.
I’d like to think we’ll be in a house sooner rather than later, especially if our family grows. Of the many things to consider, affordability has the largest weight. Though I’d much prefer a place with a backyard, a studio for her crafts and a basement for a man cave, the reality is that it is better to build equity in a starter home before moving to a bigger one. Now if only that bubble everyone seems to be talking about would just pop…