For the past few years, condos have been selling like hot cake. They offer almost everything you could think of; in-building pools, conference rooms, cafes, nearby bus/subway stations, shopping centres, and more. They’re perfect for young professionals, couples, and even small families.
Last year, when the COVID-19 pandemic shook the entire world, we witnessed a decline in the number of condo sales. People turned their direction towards spacious homes, away from the friendly communities, usually found in condominiums. For almost the entire year, there was a slump in demand for condos. But the tide is again shifting its direction towards condos. People are again buying condos.
Interestingly, every type of home has its benefit and purpose. You’ll widely see condos in busy areas, such as downtowns. People like to remain close to their workplaces and other amenities, avoiding long hours of travelling. On the other hand, you’ll mostly find single-family homes away from busy areas, such as in the suburbs. These types of homes are suitable when you are frustrated with the hustle of big cities or want to raise a family (although there is no such rule for that).
So in this post, I planned to share four pros and four cons of buying condos. The pros will boost your morale to invest in condos. And the cons will help you mitigate the risk of making a bad investment.
Like any other real estate, condos certainly go up in price. The growth, however, is usually not as high as it is for single-family homes. For example, according to several housing reports, the closing price of a 2-bedroom condo for sale in Mississauga reached $624,000 during Aug 13 - Sep 10, which was nearly $556,000 a year ago. The prices growth is more than 12% in a year.
On the other hand, the prices for a 2-bed detached home went up from $1 million to $1.1 million in a year, witnessing a price increase of 10%.
You may compare that condos did well in a year, even when they witnessed a tough year. Keep in mind that the price increase is directly related to:
For more details, you contact our real estate professionals. They will help you track the exact figures.
More to read: Steps to Follow While Buying a Condo
Investing in condos brings several advantages. We have outlined some of them here.
Condos generally come for a low price compared to single-family homes. Due to several reasons such as unlike freehold homes, condos do not come with the land it remains under the builder’s name. Then the size of a condo is usually smaller than a single-family house.
One of the major factors people buy condos is their proximity to an array of amenities and a friendly community. Most condominiums stand tall in the city’s heart (downtown areas), where everything is easy to access. That’s why you will find most condo buildings close to bus stations, malls, groceries, schools, parks, etc.
With such nearby amenities, you don’t worry about travelling from the corners of the city, and everything is steps away from you.
For those looking to have a vibrant community, condos, again, take the lead. You will find friendly neighbours, community centres, parks, and play areas where you and your children could go out in the evening and have a good time.
Although, after the COVID-19 pandemic, things have been changing. Buyers are more interested in single-family homes than condos. That’s due to the size of these single-family houses and their distance from the community. Despite that, many still prefer condos over freehold homes.
Maintenance and repairing cost is relatively low since you are not entitled to the whole premises. You pay only for what you keep.
On the other hand, a single-family home would bring a plethora of repair and maintenance costs, such as the maintenance cost of your roof, patio, gutters, paint, and every other part of your house.
The association charges you a fixed amount for condos and takes care of the external repairs, including snow removal, yard work, and other exterior maintenance.
Like said earlier, condos also appreciate. So what you buy now would be sold for a higher price in the future. And if you rent it out, you would earn more in terms of monthly rentals.
Single-family homes also follow the same trend. Their rentals are comparatively higher and receive higher price appreciation over the period.
With every good, there’s something terrible. And so is the matter of investing in condos. So here, we have shared some very common drawbacks of investing in condos.
It is a fixed fee, which means you would have to pay it even if you don’t live in it. Then the fees are set by the condo association and vastly depend on the locality. These charges could range from a few hundred dollars to thousands.
Unlike renting out a single-family house, renting a condo is complicated. Even when you own a condo, you still have to follow some restrictions set by the association.
So if you were to rent out your condo on a short-term rental basis, like what Airbnb offers, the association would come in your way and wouldn’t allow renting out the condo on a short-term basis. So when you are planning to rent out your property, make sure you understand the limitations set by your local association.
Besides rental restrictions, you would also face restrictions from the association. For instance, the association would limit the modifications you can make to the unit or the number of pets you can own.
It is strange to say, but financing a condo is indeed more expensive than a single-family house. That’s because of higher mortgage rates.
More to read: 5 Home Buying Tips for First-time Homebuyers
After going through the cons, you might feel that condo investment is not a very good idea. But that isn’t the case. Investing in a single-family house could also have some drawbacks. To help you decide if you should invest in condos or not, here’s your quick overview of what we just learned above:
When you’re buying a condo, make sure you choose the best option. Selecting the best option is usually based on factors like:
Moreover, when you invest in condos or any other property, talk to experts. And keep discussing until you’re satisfied, as you don’t want to lose a tiny bit of your hard-earned wealth.
Image credits: Flickr