Are The High Condo Prices Toronto Worth It?
Developers are still fast and furiously building condos in this city, hoping to sell them for the still high condo prices Toronto! In January, work began on an annualized 213,244 units, which is quite impressive, especially when you consider the number of properties on the market today. Of course, homebuyers all over the city are hoping that the addition of these condos will decrease prices and make housing more affordable. The developers, of course, are hoping that prices continue to stay high so they can make money off of these new constructions.
As a new homebuyer in the Greater Toronto Area, you often face one of three possibilities when it comes to buying your first property. You can buy a condo (which, although the condo prices in Toronto are very high, is still “affordable” compared to other options). Or, you can rent and keep saving until you have enough for a down payment on a single-family home. If you’re willing to consider an area outside of the GTA (for example, London or St. Catherine’s), then you can usually buy a single-family home for less than the price of a condo in Toronto!
If you’re looking at the condo prices Toronto and wondering if they’re worth it, here’s a quick guide to figuring out what the best path forward is for you!
Your Ultimate Goal Determines Whether Or Not Condo Prices Toronto Are Worth It
What is your ultimate real estate goal? Are you looking to own a home in the city? Are you looking for downtown condo living to enjoy the sights and sounds of Toronto? Can you handle a long commute into work, or can you work outside of the GTA?
Your ultimate real estate objectives help guide whether or not the condo prices in Toronto are worth it. If you prefer condo living, then, naturally, the prices are worth it. It’s not uncommon for people – especially young professionals – to prefer living in the downtown area and walking to work. The convenience far outweighs the pricing negatives. Young professionals also get a “break” in that while a three-bedroom condo exceeds $800,000 now, you can find a one-bedroom condo for around $500,000. Depending on the mortgage terms you choose, you could, potentially, begin building equity with a comparatively small down payment. It beats renting!
For Families, The GTA Prices Quickly Seem Untenable
However, for families, the thought of paying $800,000 for a three-bedroom place without a yard seems daunting at best. Additionally, most families ultimately want a home. Having a yard and space for little ones to run around is very important to many parents.
The problem is that a single-family home in Toronto costs north of $1.3 million now if you’re buying in the 416 area code. Those willing to purchase in the 905 area code can get a little bit of a break, but the prices are still over $800,000, even there.
Since property prices are so high, families often face the choice of locating somewhere further outside of Toronto and having a long commute or packing up and moving somewhere else entirely (like St. Catherine’s, which is a “GO Train” ride away from the city). As a family, which do you choose?
The Million-Dollar Question, Literally
That question is a million-dollar one, literally. The most recent data for the London market indicates that the average selling price for a home in the city is $437,000. That’s almost $1 million less than the average detached house in Toronto.
Consider the following. Suppose you have enough to put 20% down on a detached Toronto home. For the sake of simplicity, let’s assume that’s $250,000. The math breaks down as follows:
- Toronto detached home: You would have a $1 million mortgage balance, with a monthly payment of approximately $4,700.
- Toronto condo: You would have a $550,000 mortgage balance, with a monthly payment of approximately $2,600.
- London home: You would have a $180,000 mortgage balance, with a monthly payment of approximately $860.
All of these parameters assume a five-year term on a 25-year amortization schedule with reasonably good credit.
These calculations are for illustrative purposes. London is an excellent example of a smaller city that you might consider because it is only 2 hours away from Toronto and has many of the amenities of a big city. Plus, it is close to some great universities, which can be excellent for families. Other cities, like St. Catherines or Hamilton, have similar price disparities compared with Toronto.
Do You Need To Be In Toronto?
As you can see, there’s a substantial price difference between being in the city and being outside of it. As a family looking at the condo prices Toronto, you should be asking yourself how much you need to live in the GTA? It’s a beautiful city, filled with lots of amazing things to do with children, but from a place like St. Catherines or even London, it’s only a couple hour car or train ride away. You could come in for the day to go to a museum and park and be home at night.
Of course, if your work is in Toronto and there’s no way to get a comparable job outside of the city, then that’s a different story. Then, you might have to make do with the high housing costs.
However, if you can consider another area or if your work would let you be remote most of the time, then it’s worth considering places that are not within the GTA. Families will find these places are lovely and significantly more affordable than Toronto.
We’re Here To Help!
No matter where you choose to live, Citadel Mortgages can help you obtain the best first-time homebuyer mortgage. Whether you’re looking at living within downtown or you want to live elsewhere in Ontario, Citadel can work with multiple lenders to ensure you receive the best rates.
Get in touch with us today, and let us see how we can help make homeownership a reality for you!
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