As the COVID-19 pandemic was leaving its boot marks all over the Canadian economy, the only residential housing products to suffer were condos.<\/p>\n
Record-low interest rates provided consumers with newfound buying power. Extended stay-at-home orders created an urgent desire for more square footage and distance from major population centres. Buyers ploughed into the detached, semi-detached and townhouse markets in suburban and ex-urban communities.<\/p>\n
Meanwhile, demand for condos plummeted, both among end-users and investors, who play a critically important role in driving condo sales. A lack of international students and travellers, as well as the evaporation of hundreds of thousands of retail and service industry jobs, left many downtown condos vacant. Rents fell, inventory built up and prices stalled.<\/p>\n
It was a scary time if you were a condo owner, but it turns out that the height of the pandemic may have been the ideal time to be a condo buyer, because the market is back in a big and \u2014 particularly to first-time buyers \u2014 frightening way.<\/p>\n
Condo sales and prices are heating up<\/strong><\/p>\n It\u2019s hardly a surprise that the condo market is intensifying. People are returning to work in downtown cores. International travel and immigration are ramping back up. And let\u2019s not forget another key ingredient : affordability.<\/p>\n In Canada\u2019s busiest real estate markets, condos still cost a fraction of what buyers are paying for other properties. In October, the average price of a detached home in the Greater Toronto Area was more than $1.5 million. In Vancouver, detached properties sold for an average of over $1.8 million. The average price of a condo in each city was less than $750,000.<\/p>\n Those condo prices are significantly higher than they were a year ago. Vancouver\u2019s average condo price has risen 9.5% since October 2020; Toronto\u2019s has grown 13% since then.<\/p>\n But what should concern buyers more is the amount of activity the condo market is now seeing. Condo sales in Vancouver were up 14.7% year over year in October. In Toronto, they rose 28.9%.<\/p>\n When sales activity starts building that rapidly, can bidding wars be far behind?<\/p>\n Preparing for a run at the condo market<\/strong><\/p>\n Fortunately, says Cameron Forbes, general manager and broker of Re\/Max Realtron Realty in Toronto, condo buyers aren\u2019t facing quite the same raging level of competition they\u2019d be forced to reckon with in the detached or semi-detached market.<\/p>\n But you should still expect to pay more than list price.<\/p>\n \u201cA well-priced, well-located condo will definitely have multiple offers,\u201d Forbes says. \u201cIf you get ten offers on a townhouse, you might have five on a condo. The good part, of course, is that in the condo market, there is more supply from new construction.\u201d<\/p>\n But as investors, new arrivals and FOMO-afflicted first-time buyers keep purchasing properties, supply will inevitably erode, so expect prices to continue climbing. Forbes says condo appreciation isn\u2019t likely to keep pace with the price increases pummelling buyers in the detached space, but he still expects condo values to rise \u201cat a good rate.\u201d<\/p>\n Not all condo markets are created equal, of course. Shayla Ackerman of Royal LePage Regina Realty says condos remain a \u201csuper tough sale\u201d in Saskatchewan\u2019s capital. Montreal\u2019s Angela Langtry, who sells for Century 21 Immo-Plus, says only certain areas of the city are home to competitive condo markets.<\/p>\n Langtry says condo buyers expecting to face multiple offers need to be ready to \u201cjump on a hot, new listing to make sure you don\u2019t lose out.\u201d That means getting a pre-approval letter from a lender and working with a real estate agent known for being readily available and responsive.<\/p>\n Be prepared to go easy on the conditions, too, as a long list of demands is usually the best way to ensure your offer winds up in the garbage. Langtry says to keep your conditions \u201cas simple as possible while still protecting yourself.\u201d<\/p>\n Don\u2019t forget the maintenance fees<\/strong><\/p>\n One of the necessary evils of condo ownership is paying what can be considerable maintenance fees. In Toronto, Vancouver, Montreal and Calgary, condo fees typically add another $400 to $700 to an owner\u2019s monthly expenses.<\/p>\n Because lenders will take a condo\u2019s fees into consideration when determining what size of mortgage to hand you, they can sometimes throw a wrench into the plans of first-time buyers. Keep that in mind when you\u2019re scrolling through listings.<\/p>\n Condo fees are a drag, but it\u2019s not as if the owners of freehold properties are off the hook when it comes to maintenance costs. You might pay $6,000 in maintenance fees at your new condo, but you won\u2019t need to organize snow removal, replace half your shingles after a particularly brutal storm or worry about your basement leaking. You might have access to a pool or gym, too.<\/p>\n With a condo, you\u2019ll also pay far less in property taxes, so you\u2019ll claw back some of your money there.<\/p>\n Consider a stacked townhome<\/strong><\/p>\n If high maintenance fees get in the way of a condo purchase, Forbes says buyers can sometimes find relief in stacked townhouses, two-storey versions of the typical townhouse that allow for greater density.<\/p>\n Because many stacked townhouse developments don\u2019t have the amenities of most modern condo towers, their maintenance costs are much lower. In the GTA, Forbes says, stacked towns typically cost their owners less than $400 a month in fees.<\/p>\n \u201cThey\u2019ll have underground parking and lockers, but they don\u2019t have pools and they don\u2019t have elevators, so it costs a lot less to maintain them,\u201d Forbes says. \u201cIt\u2019s more affordable from a monthly condo fee or maintenance fee perspective.\u201d<\/p>\n