Looking for a condo in TO
September 17, 2007 8:52 PM Subscribe
Help a recent grad find a condo in Toronto, and help me figure out if I can afford it.
I'm a recent graduate who's currently living at home in the suburbs, and working in downtown Toronto. This, as you can imagine, leads to me spending 3 hours a day commuting via mass transit. This, and other reason, are making me seriously consider moving out and finding myself a condo somewhere in Toronto. Not necessarily downtown, but somewhere on the subway line is essentially a must, north end of the Yonge line being the ideal. I only need one bedroom, and about 500-600 sq. ft. I'm not making too much money (currently $36k) but I'm fairly frugal, so I save money pretty well, and I don't have any large expenses like a car or whatnot to drain my cash. I also have a large fund ($25k) from my grandmother to be used when I move out, as a down payment or whatnot.
So I guess m first question is: can I afford it? I'm not too in tune with the state of the housing market or mortgage rates at the moment, and I'm not quite sure as to where to educate myself about these things. I've heard it's best to put down a large down payment (25%) in order to avoid having to pay extra insurance, so should I be waiting until I have even more saved up for a down payment?
My second question is, how should I go about looking for properties? I've heard of sites like mls.ca, but are there any other good resources out there for someone just starting out? Any tips or advice I can get would be greatly appreciated. :)
I'm a recent graduate who's currently living at home in the suburbs, and working in downtown Toronto. This, as you can imagine, leads to me spending 3 hours a day commuting via mass transit. This, and other reason, are making me seriously consider moving out and finding myself a condo somewhere in Toronto. Not necessarily downtown, but somewhere on the subway line is essentially a must, north end of the Yonge line being the ideal. I only need one bedroom, and about 500-600 sq. ft. I'm not making too much money (currently $36k) but I'm fairly frugal, so I save money pretty well, and I don't have any large expenses like a car or whatnot to drain my cash. I also have a large fund ($25k) from my grandmother to be used when I move out, as a down payment or whatnot.
So I guess m first question is: can I afford it? I'm not too in tune with the state of the housing market or mortgage rates at the moment, and I'm not quite sure as to where to educate myself about these things. I've heard it's best to put down a large down payment (25%) in order to avoid having to pay extra insurance, so should I be waiting until I have even more saved up for a down payment?
My second question is, how should I go about looking for properties? I've heard of sites like mls.ca, but are there any other good resources out there for someone just starting out? Any tips or advice I can get would be greatly appreciated. :)
housing123.com is a google maps mashup of the mls.ca website. You can see what's there in the resale market. Buying pre constructionwon't save you much cash, but it will give you more time to save up.
Real estate agents are free to buyers. Sit down with one and see what you can afford.
Plug your income into a mortgage calculator. I don't think you'll get too far with $36k. Those 'starting at $189,000 signs you see for preconstruction condos? Less than 400 square feet! Tiny, but manageable if you want to go that way.
Real estate isn't a great deal if you aren't going to stay there a while. A good friend just sold a condo. They did pretty well on it. It was a one bedroom and sold for $65000 more than they bought it for 3 years ago. After commissions, lawyers fees, and other stuff, their check was $25000. Selling a place eats up a lot of money.
Also, cheap one bedroom condos are by far the biggest growth area of the market. Cityplace at the bottom of spadina ave is 12,000 units, and isn't done yet. Most of these are 1 bedrooms, and they're cheap. The same development corporation is planning a 14,000 unit development at on Sheppard between Leslie and Bayview. Again, most of these will be cheap 1 bedrooms. This is starting to sound like a supply glut to some people. You will be selling a cookie cutter unit at the same time as many, many others, who may also have the option of buying the next cookie cutter place that's shiny new.
Price out the real cost of moving. The real cost of living in this condo. Taxes, condo fees, cost of buying, cost of selling. Put tht against cheaper rent that lets you save (and splurge, within reason), be flexible, move in with friends, or a partner, or change cities. You make interest on your savings as well.
My advice: Find an apartment. Roomates if you can live with them. Live cheap, have fun, save a real down payment. You can pay $800 a month in rent in Toronto. (Save 20-25% of the price of the unit. People will tell you that they made a killing off their condo, and some have, but mostly, your profits get eaten by selling costs if you haven't been there for a long time. Any your eventual paartner/spouse won't move into that 5-600 square foot place with you. Then you'll sell, and probably won't make much money.
Renting in Toronto is quite decent. Do Not rent a condo. The prices are inflated. No one I know who knows the city well lives in a rented condo.
posted by thenormshow at 9:36 PM on September 17, 2007
Real estate agents are free to buyers. Sit down with one and see what you can afford.
Plug your income into a mortgage calculator. I don't think you'll get too far with $36k. Those 'starting at $189,000 signs you see for preconstruction condos? Less than 400 square feet! Tiny, but manageable if you want to go that way.
Real estate isn't a great deal if you aren't going to stay there a while. A good friend just sold a condo. They did pretty well on it. It was a one bedroom and sold for $65000 more than they bought it for 3 years ago. After commissions, lawyers fees, and other stuff, their check was $25000. Selling a place eats up a lot of money.
Also, cheap one bedroom condos are by far the biggest growth area of the market. Cityplace at the bottom of spadina ave is 12,000 units, and isn't done yet. Most of these are 1 bedrooms, and they're cheap. The same development corporation is planning a 14,000 unit development at on Sheppard between Leslie and Bayview. Again, most of these will be cheap 1 bedrooms. This is starting to sound like a supply glut to some people. You will be selling a cookie cutter unit at the same time as many, many others, who may also have the option of buying the next cookie cutter place that's shiny new.
Price out the real cost of moving. The real cost of living in this condo. Taxes, condo fees, cost of buying, cost of selling. Put tht against cheaper rent that lets you save (and splurge, within reason), be flexible, move in with friends, or a partner, or change cities. You make interest on your savings as well.
My advice: Find an apartment. Roomates if you can live with them. Live cheap, have fun, save a real down payment. You can pay $800 a month in rent in Toronto. (Save 20-25% of the price of the unit. People will tell you that they made a killing off their condo, and some have, but mostly, your profits get eaten by selling costs if you haven't been there for a long time. Any your eventual paartner/spouse won't move into that 5-600 square foot place with you. Then you'll sell, and probably won't make much money.
Renting in Toronto is quite decent. Do Not rent a condo. The prices are inflated. No one I know who knows the city well lives in a rented condo.
posted by thenormshow at 9:36 PM on September 17, 2007
TheNormShow: your friends incurred a very high selling cost, unless they were selling a place in which they did not have primary residence status. If an agent charges 6% on the first $100k and 2.5% on the balance, the cost of selling a $1M condo would be around $28,500. Even with transfer fees and lawyer's charges, that would come out to perhaps $40k, leaving your friends with $25k. But I'm guessing your friends did not have a $1M condo, given they only made $65k in 3 years. At the very least, they must have been taxed on the profits or something. Or perhaps they didn't negotiate the real estate commission.
That being said, Veritascitor should definitely find out selling costs, especially if not planning to stay at least 5-7 years.
posted by acoutu at 9:53 PM on September 17, 2007
That being said, Veritascitor should definitely find out selling costs, especially if not planning to stay at least 5-7 years.
posted by acoutu at 9:53 PM on September 17, 2007
Toronto is a renters market.
Who knows, maybe I'm wrong.. Compare the cost of renting to the true carrying cost of buying the same unit. I bet a lot of investors are operating in the red and counting on prices going up (a lot) to recoup their costs. As long as condos are being built as fast as they are, and rents are as low as they are, buying makes no sense whatsoever.
Renting a floor in a converted house, or a 1 bedroom in an older apartment building, are even more economic choices. Ya, you'll have to figure out someplace to park your money, but that is a pretty good problem to have :P
posted by Chuckles at 11:16 PM on September 17, 2007
Who knows, maybe I'm wrong.. Compare the cost of renting to the true carrying cost of buying the same unit. I bet a lot of investors are operating in the red and counting on prices going up (a lot) to recoup their costs. As long as condos are being built as fast as they are, and rents are as low as they are, buying makes no sense whatsoever.
Renting a floor in a converted house, or a 1 bedroom in an older apartment building, are even more economic choices. Ya, you'll have to figure out someplace to park your money, but that is a pretty good problem to have :P
posted by Chuckles at 11:16 PM on September 17, 2007
Response by poster: Thanks for the comments about renting. I had just always figured that it would make more sense to buy, no matter what. Even if I break even after selling a condo, would that not be better than having money vanish into the black hole that is rent? Or are you saying that chances are I'll actually lose money in the long run?
posted by veritascitor at 4:48 AM on September 18, 2007
posted by veritascitor at 4:48 AM on September 18, 2007
From the Globe and Mail in July: Rent or buy: The calculations must include many factors
I recently bought a condo in downtown Toronto, but there were some differences:
I would suggest talking to a bank to get an estimate for the kind of mortgage you can afford, then watching MLS for a while to see what's out there. We found that we really disliked the type of development that is going on now, City Place being a good example. The units I've seen in there could be designed better, and there isn't any sense of a neighbourhood. Once my friends move out of their unit, I'll have no reason to walk down there anymore. My current place, on the other hand, is right in the midst of everything. When you see a nice listing, check out its Walk Score.
Also remember that when you buy new, you're paying for new. When you buy in an older building, you have 3 advantages:
Once you figure out your mortgage eligibility, compare it with the cost of renting. Scour Craigslist to get a sense of how much rent is in different areas. Find a cheap place, save aggressively, keep watching MLS, and scoop up that amazing deal when it comes around.
I punched your salary and down payment and some expenses into the CMHC calculator. You could potentially be approved for $134k or $685 a month at 5.79% interest and a 25 year amortization.
If this is accurate, you're not going to find much. To give you an idea of what my friends and I have paid for places downtown lately: $209K for a 1 bedroom, $210K for a 2 bedroom (total fluke, this doesn't happen), $250K for a 2 bedroom, and friends of mine are looking to sell a 1 bedroom for $280. All condos, all 850 square feet or under.
You can definitely find great deals on rent though, and invest that $25K for a few years.
posted by heatherann at 6:18 AM on September 18, 2007
I recently bought a condo in downtown Toronto, but there were some differences:
- dual-income, no kids situation
- help with the down-payment
- we plan on staying here for as long as possible
I would suggest talking to a bank to get an estimate for the kind of mortgage you can afford, then watching MLS for a while to see what's out there. We found that we really disliked the type of development that is going on now, City Place being a good example. The units I've seen in there could be designed better, and there isn't any sense of a neighbourhood. Once my friends move out of their unit, I'll have no reason to walk down there anymore. My current place, on the other hand, is right in the midst of everything. When you see a nice listing, check out its Walk Score.
Also remember that when you buy new, you're paying for new. When you buy in an older building, you have 3 advantages:
- You can look up the history of the condo corporation and see whether they will manage your money well
- You won't get the rug pulled out from under you when the developer sells all the units and stops subsidizing your condo fees
- Cheaper and often designed better (none of this "one bedroom, two bathrooms" nonsense)
Once you figure out your mortgage eligibility, compare it with the cost of renting. Scour Craigslist to get a sense of how much rent is in different areas. Find a cheap place, save aggressively, keep watching MLS, and scoop up that amazing deal when it comes around.
I punched your salary and down payment and some expenses into the CMHC calculator. You could potentially be approved for $134k or $685 a month at 5.79% interest and a 25 year amortization.
If this is accurate, you're not going to find much. To give you an idea of what my friends and I have paid for places downtown lately: $209K for a 1 bedroom, $210K for a 2 bedroom (total fluke, this doesn't happen), $250K for a 2 bedroom, and friends of mine are looking to sell a 1 bedroom for $280. All condos, all 850 square feet or under.
You can definitely find great deals on rent though, and invest that $25K for a few years.
posted by heatherann at 6:18 AM on September 18, 2007
veritas, there's no point in buying a condo. Based on the calculations above, $134K will get you, roughly speaking, a shoebox with a door and a window that won't open.
Rent, save your pennies (put them into your RRSP! do it!), buy a condo after the market corrects. You can find unbelievable rental places in amazing neighbourhoods in Toronto, with or without roommates, at very reasonable rates.
posted by dirtynumbangelboy at 6:26 AM on September 18, 2007
Rent, save your pennies (put them into your RRSP! do it!), buy a condo after the market corrects. You can find unbelievable rental places in amazing neighbourhoods in Toronto, with or without roommates, at very reasonable rates.
posted by dirtynumbangelboy at 6:26 AM on September 18, 2007
I'd never buy in the Toronto market as it is right now (with new condos way the hell out at Dufferin and Steeles STARTING at over $130K there's no way you'll find something decent on the subway line at a price you can manage AND that will be a good investment). You can find some very nice rentals on the subway line (including as far south as Yonge & Davisville or St. Clair) for far less than you'd pay in mortgage/condo fees, especially since Toronto is a renter's market right now. And what makes you think that a condo won't also be a black hole for your money? Just because you're ostensibly buying something you can sell later doesn't mean it's a good investment or that you'll actually get out what you put in.
posted by biscotti at 7:01 AM on September 18, 2007
posted by biscotti at 7:01 AM on September 18, 2007
Look into Options For Homes. I just got a close to 700 sq ft. condo (without a parking spot) for a great price at Keele and Dundas, which is very close to the Bloor line.
posted by juiceCake at 7:27 AM on September 18, 2007
posted by juiceCake at 7:27 AM on September 18, 2007
Seriously, you can't afford to live where you want to on that budget. Anything that's on the subway line in a 'I can walk to the subway in 10 minutes or less, preferably without going outside' way is automatically priced much, much higher than anything not on the subway line--to the tune of about 50-100K a unit.
Along the Sheppard line is not quite the same increase (but the condos out that way can be a little pricey anyway, since Bayview and Sheppard is an expensive area), but you're always running the risk that the TTC will shut the damned line down, and then you'll lose a lot on your units.
If you seriously want to buy and want to be on the subway line, your best bet is probably Islington--there are quite a number of relatively inexpensive condos in that area--or out in Scarborough. I'm not that knowledgeable about the Scarborough end of things since I mentally wrote Scarberia off my list of acceptable places months ago, but I recall it being cheaper.
posted by jacquilynne at 8:24 AM on September 18, 2007
Along the Sheppard line is not quite the same increase (but the condos out that way can be a little pricey anyway, since Bayview and Sheppard is an expensive area), but you're always running the risk that the TTC will shut the damned line down, and then you'll lose a lot on your units.
If you seriously want to buy and want to be on the subway line, your best bet is probably Islington--there are quite a number of relatively inexpensive condos in that area--or out in Scarborough. I'm not that knowledgeable about the Scarborough end of things since I mentally wrote Scarberia off my list of acceptable places months ago, but I recall it being cheaper.
posted by jacquilynne at 8:24 AM on September 18, 2007
RENT. You just graduated uni and you have years and year (and YEARS) to wait until you buy a place. I bought my first place at 37. Toronto has so many rental options and, unlike here in Calgary, you don't have to worry about every one of them being converted into condos.
posted by ethnomethodologist at 9:20 AM on September 18, 2007
posted by ethnomethodologist at 9:20 AM on September 18, 2007
Response by poster: It seems to be an overwhelming response in favour of renting. Thanks, all, for your opinions. Seems like there was a lot I didn't know. This is my first MeFi post, and I'm glad to say I'm very happy with the response. A lot of you went into a lot more detail than I was expecting, and I'm very appreciative.
As for the money I have at the moment, the 25k is already invested in some way (not sure of the details, but my mother has been taking care of that with her financial adviser). I also have an RRSP already set-up for me, and now that I'm working, I'm planning on setting up an automatic monthly contribution to it.
posted by veritascitor at 10:22 AM on September 18, 2007
As for the money I have at the moment, the 25k is already invested in some way (not sure of the details, but my mother has been taking care of that with her financial adviser). I also have an RRSP already set-up for me, and now that I'm working, I'm planning on setting up an automatic monthly contribution to it.
posted by veritascitor at 10:22 AM on September 18, 2007
That black hole that is renting thing.. Remember, condos have maintenance fees and property taxes, which are also black holes, and account for at least half of your potential rent, and often much more.
Another factor is the way you shop. People often buy the most they can afford, but rent the least they can stand, which has implications in the long term financial calculations. Also, how savvy you are, and the effort you put in, will be dominant factors in how well you do, whether buying or renting.
posted by Chuckles at 11:15 AM on September 18, 2007
Another factor is the way you shop. People often buy the most they can afford, but rent the least they can stand, which has implications in the long term financial calculations. Also, how savvy you are, and the effort you put in, will be dominant factors in how well you do, whether buying or renting.
posted by Chuckles at 11:15 AM on September 18, 2007
Just wanted to add a note of thanks to juiceCake on this thread (you seem to have MeFiMail turned off or I'd have emailed you), I bought into the Options development at Keele and Dundas earlier this week.
posted by jacquilynne at 8:42 AM on November 2, 2007
posted by jacquilynne at 8:42 AM on November 2, 2007
This thread is closed to new comments.
In many parts of Canada, units are selling for much more than they could recoup in rent, even with 25% down. If there's a big spread, you might be better to rent. If the difference is only equal to the equity, it's less important.
I punched your salary and down payment and some expenses into the CMHC calculator. You could potentially be approved for $134k or $685 a month at 5.79% interest and a 25 year amortization. You might want to go to MLS.ca and see what this would buy, then consider how much the same thing would cost to rent, compared to mortgage, strata, taxes and upkeep.
Before you buy, you should have established an emergency fund to cover six months of expenses (given the mortgage, not your current situation). You should try to pay off any non-student loan debt.
posted by acoutu at 9:30 PM on September 17, 2007