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Creeping condo-ism
Condos now make up over 40 per cent of all homes sold in Toronto. In 2000, just 20 per cent were condos.
Who’s buying
Mostly first-time buyers. Normally, first-time buys represent 40 to 50 per cent of real estate transactions now, 70 per cent of sales are to first-timers, many of them condo buyers.
Average price of a Toronto condo:
$300,000
What development folk say
Condos have made home ownership attainable for a whole generation of young people who couldn’t otherwise afford their own digs – especially in the downtown.
Closer to the ground floor
Two hundred grand for 900 square feet (not including maintenance and other fees) is steep.
At 5.39 per cent interest over 25 years, the monthly payment on a $200k mortgage is $1,208. Add $400 a month for condo fees (low, actually) and it turns out you need a gross income of at least $65,000 a year to carry the payments.
Adding to the fabric of neighbourhoods
It’s certainly true that some of the funkiest condo developments downtown have done well by attracting hip young professionals and artists who add to the vibrancy of the ‘hood.
On the other side of the street
But culture, too, can become a casualty of condo development, which swallows up the cheap warehouse space occupied by artists and theatres – as happened with Artword Theatre on Portland. Is the Theatre Centre on Queen West going to be next?
Those same hipsters are also pricing poor people out of once affordable neighbourhoods.
The comunity-building we see happening around loft condo developments in established neighbourhoods isn’t happening in previously undeveloped areas (think windswept CityPlace on the railway lands), where there’s no “community” to speak of.
Riding the wave
Experts tell us that this condo craze is different from the boom-and-bust version that preceded it. There aren’t as many speculators in this market (about 20 per cent of all condo buyers), so the dreaded glut isn’t likely to materialize.
Bursting the bubble
More of those condo buyers may be speculators than we think. One U of T expert estimates that more than one-third and as many as one-half of all condo units in Toronto are being rented – so somebody’s buying them as an investment.
Bank economists have also been warning since 2002 that the large stock of unsold condos and tens of thousands of new units coming on the market throw sales numbers into question.
For first-time buyers, a slight jump in interest rates makes all the difference. If rates, for example, go from 5.39 to 6.39, that’s $126 more a month -and condo fees don’t stay stable either.
news@nowtoronto.com
Amount by which average rent for a one-bedroom has gone up since 1996: $220 (to $894)
Amount by which average rent for a two-bedroom unit has gone up since 1996: $240 (t0 $1,055)
