1. What is the future of the condo market?
  2. What will my closing costs be?
  3. How should I choose my real estate agent?
  4. What is better a variable or fixed mortage?
  5. What type of condominium is the best for investment?
  6. Is preconstruction still good value for money?
  7. Are there any hidden costs in preconstruction?
  8. Should I sell my condo first or buy a new one first?
  9. How much will maintenance fees go up?
  10. Is it better if condo fees include Hydro or if Hydro is separately metered?
  1. What is the future of the condo market?

    I have been asked this question on a daily basis ever since I became a real estate agent. The true answer is speculative. Nobody has a crystal ball or can predict the future for sure. My own educated guess involves several factors:

    1. The market is not the same in all areas. Every building and every area has a different and individual appreciation. The high demand buildings have appreciated at a much faster pace than the lower demand areas. I feel strongly that some buildings will continue to appreciate in to the future and some buildings will not thrive based on their age. Buy smart is the point.
    2. The condo market is driven in part by Toronto housing prices. The prices are so high that it is unaffordable for most purchasers to buy houses so they opt for lower priced condos in their place. If interest rates go up so will house prices which will push up the condo market demand for low priced condos.

    On the whole, I feel that newer condos with reasonable maintenance fees will continue to appreciate as long as interest rates don't go up overwhelmingly high (over 10%) which they are not slated to do in the shorter term. Demand for condos (especially downtown) is still very strong. Multiple offer situations still occur regularly. Demand is not simply going to fall off in a matter of months. The real estate market changes slowly and the condo market should remain strong for years to come.

  2. What will my closing costs be?

    This depends on whether you are buying preconstruction or resale. In resale you pay land transfer tax which is appr 2% (It is actually calculated on a sliding scale and varied based on what price range you are in) of the purchase price in addition to lawyer's fees which will cost you about $1000-$15000 dollars. If you are a first time buyer you get approximately up to a $6 000 rebates on land transfer tax. You will also pay the adjustments on closing which are things like condo fees and taxes already paid for by the vendor.

    In preconstruction the closing costs are much higher. Generally you pay lawyer fees plus land transfer tax (unless you are a first time buyer in which case you’re partially exempt) plus builder adjustments costs (different then the adjustments costs above). Builder adjustments vary widely based on the builder and development. A good lawyer will cap these so that you are not paying through the nose. I estimate these at $7 000 as an average. You will also need to pay interim occupancy fees to the builder. This is essentially rent you pay to the builder between the time that you take occupancy of the unit and the time the unit gets registered. This fee is usually about the same as what you would pay for your mortage plus your condo fess but you don't build any equity on your mortage during this period.

  3. How should I choose my real estate agent?

    For purchase especially I feel it is helpful to find someone who is familiar with the area, the buildings and value in the neighborhood you are interested in. If you want a condo, find a condo specialist. If you have a specific area in mind it would be even more helpful if they specialized in condos in that area. It is also important that you establish a good relationship with your agent and that you feel comfortable with them.

  4. What is better a variable or fixed mortage?

    A variable rate mortage is a mortage that fluctuates based on the prime rate. A fixed rate is a mortage rate that is set as constant for a predetermined period of time.

    It depends on your situation and the interest situation to which type of mortage to choose. I usually recommend a variable rate at a bank where you can cap your variable rate to a fixed anyhow. Also in the case of many purchasers the first couple of years are the most difficult in terms of payments and having a variable rate enables them to have lower payments initially.

    On the other hand, with a fixed rate you will know exactly how much your payments will be for the term which can help some people plan their monthly spendings. It also depends on what the trend with the prime rates are when you purchase. If they seem to be climbing steadily upwards than a fixed rate may be best. Talk to your mortage broker for a current answer.

  5. What type of condominium is the best for investment?

    The answer to this question is largely speculative but what I can tell you is not to buy the highest priced condominium on the market. Generally renters pay for space and not so much for view. As a result for a better return the investor is usually better off to purchase a unit which is in on a low floor as it will rent practically the same as one on a higher floor. The biggest differences you will see in rent are between, 1 bedrooms to a 1 bed +den or to a two bedroom apartment. A parking spot is also positive for a good return on rent. In my opinion, leaving appreciation out of the equation, you are best off purchasing a 1 bed +den or 2 bed condo with parking on a lower floor that is not too expensive to collect the best rent for your purchase price.

  6. Is preconstruction still good value for money?

    Back about 5 years ago preconstruction prices were exceptionally good but today most developments are priced above or at market. Many buyers still have the perception that preconstruction sales are a better deal and look at preconstruction sites for investment. Generally this is not a good idea.

    Today preconstruction also has many hidden fees like interim occupancy (rent you pay to the builder between occupancy and registration) and adjustments (random extra costs the builder charges you on closing). There is also a huge uncertainty to when a development will actually be ready and what it will look like as builder's contracts give builders all the rights.

  7. Are there any hidden costs in preconstruction?

    Most builders salespeople won't tell you about them as primarily they work for the builder but there are many of them. Adjustment costs are costs on building registration that the builder has to pay that are passed on to the buyer. Items like educational levies and installing hydro meters are good examples. The costs are typically more expensive than land transfer tax on closing.

    Interim occupancy is the rent you pay to the builder from the time between when you move in and the time you take title (when the building registers). Depending on what floor you are on this could be for up to a year.

  8. Should I sell my condo first or buy a new one first?

    This depends. It depends on supply and demand. If your condo is in super high demand than you can probably find and purchase your unit first with little risk of not being able to sell yours. If your condo is hard to sell than you should sell first.

    Consult your realtor (hopefully me) for the answer to this question in your specific case

  9. How much will maintenance fees go up?

    Maintenance fees typically see the largest increase in the first year. Up until the first year after registration the maintenance fees are based on what the builder set as a budget for the building. Preceding that the condo fees are based on what is actually spent in reality. For this reason the largest maintenance fee increase is after the first year.

    After this point in time generally the maintenance fees will remain fairly stable unless there is a problem with a building.

  10. Is it better if condo fees include Hydro or if Hydro is separately metered?

    Each method of paying condo fees has positives and negatives. When condo fees are included in then you know exactly what your monthly spending are which makes it much easier to budget expenses.

    When condo fees are not included in maintenance you have the advantages that you are not paying for what your neighbors spend. Residents are also less likely to over consume heat and hydro if they are paying for them directly.

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