Real estate transactions have long been a widely recognised investment channel, so people not only weigh their own housing needs when buying a home but also take into account the room for appreciation. All investors want to buy a home with the prospect of continuous and stable appreciation, and over a period of time to obtain a certain return.
The Canadian real estate market in recent years has seen a steady increase in prices every year, and this high yield investment has attracted a large number of Chinese investors, coupled with the influx of new Chinese immigrants, Chinese buying power in the real estate market should not be underestimated. Condominiums and houses as the two main types of housing in the Canadian real estate market attention are driving the Canadian real estate market forward, leading real estate prices and trends, but also leaves many investors uncertain about which type of housing investment yield the best.
The convenience of the city centre is not comparable to the remote locations and the investment prospects are more promising, which are important reasons for the popularity of downtown housing, but the high prices of downtown housing are discouraging for many people. The price of a Condo home is often much lower than a House, which makes it easier for investors to enter the Condo market and enjoy the modern lifestyle and high quality of life in the city centre. In order to get a better visualization of the cost of purchasing and maintaining a home and to be able to better account for the return on investment relationship, we need to use some specific data to analyze.
The surge of Chinese house prices in the last few years has made many investors worry about the domestic property bubble, the relative stability of the overseas market attracted their attention. Many people also come to the domestic big-city housing prices are too high, Toronto house prices are cheap conclusion. But such crude generalisations are inaccurate, and house prices, no matter where in the world they are, have to be a combination of house type and location.
For example, a 650-square-foot one-bedroom condo unit in downtown Toronto is basically the equivalent of a 3-bedroom house in the northwest suburbs of Toronto, so from that perspective, you can enjoy a larger home away from downtown and at a moderate price; a small two- and a three-bedroom house in the Yonge and Eglinton area costs millions, but a two-bedroom condo in the same area costs about 370,000+. So if you want to live spaciously in the city centre, you'll have to spend more money on a larger home. Although the price of a house is particularly important in the purchase process, it should not be the only criterion to judge. It is the overall quality of the house that really affects the room for future appreciation.
In addition to the monthly loan and management fees, there are other costs that need to be calculated in order to determine which is more suitable for you, such as land transfer fees, housing insurance, land tax, etc. The amount of these costs can vary greatly depending on the housing situation.
One obvious example is the house insurance, which is included in the management fee of Condo, which is not included in the ordinary house itself, but the house plus these two types of insurance will cost a lot of money. And, buying a House is really buying the whole building, for which there are more aspects to consider than buying a Condo, natural disasters, sewers, etc.
Expenses such as land taxes, loans, and loan insurance are professionally calculated with mathematical formulas that are tied to the size and price of the home, and the difference between Condo and House's expenses for these areas is sometimes staggering. The average House in Toronto has a land tax of $3,000+ a year, while Condo is in the $2,000+ a year range.
In addition to the above-mentioned costs, hidden costs also need to be considered; a house needs more time to maintain, weeding, shovelling, tree planting, maintenance, etc. are indispensable, the older house will make the maintenance costs increase a lot. However, some people think that the management fee of Condo is too high, even if it is $400/month, it is still $5,000 a year, so the management fee has always been a matter of opinion.
Unlike a Condo, which only requires improvements to the interior of the unit and does not involve exterior "big things", a House can involve roof renovations, window replacements, backyard design, driveway paving, etc. The cost of these big moves is also incalculable, and House houses sometimes have a little bit of a defect that requires more time, effort and money to fix. This is a big reason why busy white collars and elderly people like to live in a Condo.
On the flip side, House doesn't have to pay monthly management fees on time, and even if there is something that needs to be repaired, it can be arranged according to its own practical situation, which is more flexible for money flow.
For investment potential, the investment outlook is a little more optimistic as the house includes the value of the land, the value of the house is not only the value of the building, but also includes the value of the land, the high prices in the city centre must be related to the high land prices, and therefore there is more room for appreciation.
Condo houses have a slightly weaker land value and have less room for appreciation in the same lot than houses, and Condo also has a strong "old and new" problem, with a short life cycle in Condo, usually divided by ten years, and generally better price growth in 10 years, because people always like "new" things. As we all know, as the Condo gets older, its interior facilities become older and less able to keep up with the times, making it harder to attract people.
According to TD Bank's survey of the Condo market, 39% of Condo home buyers consider Condos as an investment and want to earn their monthly rent; 37% plan to move into their investment Condo home at an appropriate time in the future to enjoy both House and Condo housing styles during their lifetimes. In fact, 26% of Canadian Condo buyers do not consider their Condo purchase as an owner-occupied home. Buying a Condo and then renting it out is a common way to invest and can be described as a labour-saving way because once you find the right tenant, you will have a regular monthly income and won't have to make much effort to maintain it.
Even though many people invest in Condo, a significant number of people still insist on investing in House, believing that House is more valuable than Condo, and are willing to pay more upfront for later gains.
In fact, investment is not only based on the return, but also on the investor's ability, including the ability to bear the risk, family financial ability, the ability to take care of the usual maintenance. Regardless of investment type, listen to people with professional knowledge, consult experienced real estate agents and loan investment analysts are essential. After all, real estate transactions are not a small amount.
This article is contributed by Juwai Columnist, Jackie Jiang