Buying Your First Condo

| Buying

I’ve heard a dozen variations of the same joke from my Millennial clients:

  • There should be a Millennial game of Monopoly, where you walk around the board paying rent, never being able to buy anything
  • Our whole generation loves brunch because it’s 2 hours of distraction from the fact that we’ll never own real estate
  • Every iteration of avocado-budgeting you can imagine

Questions of housing affordability have dominated Toronto’s news cycle for years. And for good reason. The question of how, and when, Millennials will be able to afford their own homes is a major concern for this generation of Torontonians.

State of the Millennial Market

Many Millennials are being priced out of buying their first home in Canada’s more expensive markets like Toronto and Vancouver. And it’s not just these two cities: over 60% of Canadian Millennials think that properties in their local regions are unaffordable.

Coupled with the increasing expense of renting a home in Toronto, saving and budgeting for a new home is being pushed to much later in life for many young buyers.

It means that condos are some of the last affordable starter homes for most Millennial buyers.

And yet they might not be that affordable for long.

Why Can’t Millennials Just Buy Smaller Condos?

After the drop in detached home prices in 2017, condos surged in popularity. Now, almost a year after the ripple of the Fair Housing Plan, condos have increased in price more than almost every other type of housing. The only home type that’s made a higher jump? Townhouses.

It looks like one of the key factors driving up prices in Toronto is affordability itself: cheaper housing is in high demand, causing prices to rise faster than other kinds of homes. And it’s not just Millennials; downsizing is a major trend in 2018, so the competition for small-scale housing is heating up.

So it stands that condos are so popular that they might not be a viable starter home for first-time buyers for long.

The other concern? Growing families.

Where Do We Put The Kids?

Demand for large space is only dwindling in the expensive and luxury sectors. When it comes to demand for larger space in affordable homes, Toronto is struggling to keep up.

Most new construction units in condo buildings are being slated as one-bedrooms. Developers make a higher margin on smaller units, and so there is less incentive to build larger units.

Two- and three-bedroom condos are becoming hot commodities as young families stay in condos longer.

Adding to the problem? Downsizing baby boomers are also competing for the same space.

On the bright side, builders and developers are getting the hint. Kid- and family-friendly condos are popping up around the city, complete with playrooms, teen hangout spaces, and game rooms.

Want to know more about kid-friendly condos? Send me a message!

What Can We Expect In the Future?

According to the latest census, condos house more than 20% of Torontonians and 13% of all Canadians.

As the ecological impact of low-density housing and as Toronto’s population increases, condos are likely the long-term solution to GTA housing. And the long-long term.

Expect taller buildings, smaller units, and more condos being built in what used to be “unlikely” places. Suburban areas like Vaughan, Oshawa, Hamilton, and Brampton are sprouting high-rise condos quicker than ever before, especially around hot transit pockets. Soon, suburban condos will be the norm.

If the pricing trends continue as-is, this might be the kind of housing that many Millennials opt for in the upcoming decades.

How Can I Afford My First Home?

The big question: if you’re a first-time buyer, in one of Canada’s most expensive markets, how do you buy your first home?

You have a few options:

Buy anything

As prices continue to rise, getting into the market – any market – is increasingly important. Buying outside of your ideal location, buying smaller than you’d like, or buying a fixer-upper are viable options. At least get a foot in the door, within boundaries of smart and reasonable budgeting, to aim for a long-term approach to get a home more in your wheelhouse.

Go with pre-construction

Even pre-construction is getting expensive. But the earlier you buy, the cheaper it is. Want to know more? Here’s everything you need to know to get the most out of your pre-construction purchase. Take a look.

Buy together

Talk to any mortgage broker and they’ll tell you: we’re seeing more and more shared home buying in Toronto.

Whether parents are paying for half a house, multiple families are splitting the cost, or even singles looking to share a smaller space, shared buying is picking up steam.

There are some strange and interesting logistics when it comes to this. Want to know more? Ask me!

Talk to a condo-specific Realtor

In February, there was a Toronto-area condo that sold for $62,000.

It’s true. A small bachelor unit near Jane and Steeles went for less than $100,000. It’s possible to find cheap condos in the GTA. These are usually major fixer-uppers, but sometimes, off-market sales can offer decent scores with low competition. Connect with a Realtor who specializes in condos and they’ll be able to source something hard-to-find in your price range.

Want to know more? I’d love to help you with your first home buying journeySend me a message and we can talk about your options!