The majority of Vancouverites who recently purchased or intend to purchase a condo say that if they had more money, they would prefer to buy a house instead. The 2011 TD Canada Trust Condo Poll, which surveyed Canadians who are thinking of buying, or recently bought a condo, found that affordability of condos is a big attraction, especially in Vancouver (64% versus 46% nationally) and for respondents under 35-years-old (62% versus 46% for other age groups). Vancouverites are more likely than those surveyed in other cities to say they would consider buying a condo with a friend to make purchasing more affordable. Condos seem to be viewed as a stepping stone into homeownership, with many planning to move in the not too distant future. But, is this a good strategy?
"Especially if you are planning a joint purchase with someone, be clear about your timeline and have a plan in place for the eventual sale of the condo," advises Barry Rathburn, Manager, Residential Mortgages, TD Canada Trust. "Further, if you are only planning to own a condo for a few short years, calculate the costs that you will incur, such as condo fees, parking fees and moving expenses and work this into your budget. Depending on how soon you plan to move, these costs could outweigh the equity you'll build and receive from the eventual sale of your condo. I understand the attraction of owning a property, but in some cases it can make more financial sense to continue to rent while you save for a down payment on the home you really want." Home Sweet Home - but for how long?
Half of Vancouver respondents expect to live in their condo for three years or less (18%) or four to six years (32%). Across cities surveyed, the number planning for a short stay is highest amongst respondents under 35. Nearly one-quarter (22%) of respondents in this age group said they don't plan to spend more than three years in their condo and another 45% plan to move after four to six years.
Has the tightening of mortgage rules affected the condo market?
Forty-nine percent of Vancouverites said the recent amortization change to 30 years for new mortgages had a significant impact on their decision to choose a condo over other types of homes.
Somewhat alarmingly, the poll found that more than one-quarter (26%) of those intending to buy a condo in Vancouver were not aware of the recent changes to lending rules. "Homebuyers need to have some understanding of the mortgage laws. If you plan to buy a home, you can possibly save yourself a lot of money in the long run by understanding your options and making well informed decisions about the type of mortgage you choose and the amount of your down payment based on what you can afford," says Rathburn. "Familiarize yourself with different mortgage options, so you can weigh the pros and cons of each before making a decision. There are experts at the bank who can walk you through different mortgage options and help you find the right solution for you, including a variety of flexible mortgage payment features, which can give you the choice to manage your mortgage payments, which is something that you may need in the future."
What do Vancouverites look for in a condo?
Vancouver residents named good building security as the most important feature to look for in a condominium (98%). Keeping with the theme of affordability, low condo fees was the second most popular answer (96%). Eighty-four percent of Vancouver respondents said they were not willing to pay more than $400 in condo fees monthly. These figures remain consistent with findings from a similar poll conducted by TD Canada Trust in 2010. Other important features were attractive interior design features, available parking and an energy-efficient building (all 93%).
Condos popular with downsizing pre-retirees:
Nationally, those over 50 are attracted to condos because they fit into their plans to downsize their home. Not surprisingly, when those over 50 move into a condo, 31% don't plan to move again. Since they plan to stay put, many over 50 are making their condos as comfortable as possible, with 53% planning to spend more than $10,000 on upgrades (compared to only 15% of those under 35).
"Moving to a smaller, less expensive home can free up money to allow pre-retirees to make some upgrades and enjoy a bit more luxury in their space," says Rathburn. "It's especially important for those who are selling their home to downsize as part of their retirement strategy to make a budget for any upgrades and stick to it. You don't want to get carried away and spend all the extra money you earned with the sale of your previous home."
Approximately half of Vancouver respondents are planning to make upgrades to their condo right away (48%). One-quarter of Vancouverites say they will spend less than $5,000 on these upgrades, 51% will spend between $5,000-$10,000, 18% will spend $10,001-$15,000 and 7% will spend more than $15,000.
About the 2011 TD Canada Trust Condo Poll From March 25 to April 11, results were collected from 806 people in Vancouver, Toronto, Calgary and Montreal, through a custom online survey by Environics Research Group. Responses were collected from 204 Vancouver residents. Respondents had either bought a condo in the past 24 months, intend to buy a condo in the next 24 months, or considered a condo when shopping for a home.