- TD Canada Trust Condo Poll suggests condo affordability is key for young homeowners -
Many Montrealers are attracted to condos because they want to live downtown and cut down their commute. In the 2011 TD Canada Trust Condo Poll, which surveyed Canadians who are thinking of buying, or recently bought a condo, more Montrealers named these two reasons as the main motivation for their condo purchase than respondents in any other city. The poll found affordability to be another main reason for Montrealers' interest in condos (42%). Across all cities surveyed, affordability was most important for respondents under 35-years-old (62% versus 46% for other age groups). This age group seems to view condos as a stepping stone into homeownership, with many planning to move in the not too distant future. But, is this a good strategy?
"The convenience of living downtown and cutting down the commute time is making condos an attractive option for many Montrealers who view them as an affordable alternative to a house," says Christine Marchildon, Senior Vice President, Quebec Region, TD Canada Trust. "However, if you ultimately hope to own a house and plan to move from your condo in a few short years, I strongly encourage you to calculate the costs that you will incur, such as condo fees, parking fees and moving expenses. Depending on how soon you plan to move, these costs could outweigh the equity you'll build and receive from the eventual sale of your condo."
What do Montrealers say are the most important features in a condo?
The top feature Montrealers look for in a condo is a balcony (92%). They also say low condo fees are important (91%) and nine-in-ten Montrealers (89%) said they wouldn't pay more than $400 in monthly condo fees. These figures remain consistent with findings from a similar poll conducted by TD Canada Trust in 2010. Attractive interior design features (89%) were also important. Nationally, those over 50 are more likely to say attractive exterior design is an important consideration (88%), whereas younger respondents were more concerned about being close to public transit (85%) and near theatres, restaurants and shopping (85%).
Home Sweet Home - but for how long?
Four-in-ten (41%) Montreal respondents expect to live in their condo for three years or less (14%) or four to six years (27%). Nationally, the number planning for a short stay jumps even higher amongst respondents under 35. In fact, across cities surveyed, nearly one-quarter (22%) of respondents in this age group said they don't plan to spend more than three years in their condo and another 45% plan to move after four to six years.
Has the tightening of mortgage rules affected the condo market?
As the TD Canada Trust Condo poll found young Canadians to be most concerned about affordability, it is not surprising that many in this age group said the new amortization change to 30 years for new mortgages had a significant impact on their decision to choose a condo over other types of homes (63%). Lending law changes didn't influence Canadians over 50; three-quarters say the changes to lending rules had no effect on their decision to consider a condo.
Somewhat alarmingly, the poll found that more than one-quarter of Montrealers who intend to buy a condo (26%) were not aware of the recent changes to lending rules. Nationally, this number was even higher (39%) among those under 35. "If you're planning to apply for a mortgage, it's essential that you understand the lending rules and the options you have. This allows you to weigh the pros and cons of different mortgage options and make well informed decisions about the type of mortgage you choose and the size of down payment you can afford. This can save you a lot of money in the long run," says Marchildon. "There are experts at the bank who can walk you through different mortgage options and help you find the right solution for you, including a variety of flexible mortgage payment features, which can give you the choice to manage your mortgage payments, which is something that you may need in the future."
Condos popular with boomers but for different reasons than young Canadians
Those over 50 are attracted to condos because they fit into their plans to downsize their home. Not surprisingly, when those over 50 move into a condo, 31% don't plan to move again. Since they plan to stay put, many over 50 are making their condos as comfortable as possible, with 53% planning to spend more than $10,000 on upgrades (compared to only 15% of those under 35).
"Moving to a smaller, less expensive home can sometimes be called 'right-sizing' and allows many pre-retirees to afford a bit more luxury in their new space," says Marchildon. "If homebuyers plan to make upgrades, I recommend they make a budget and stick to it. Especially for those who are selling their home and downsizing as part of their retirement strategy, it's important not to get carried away and spend all the extra money you earned with the sale of your previous home."
About the 2011 TD Canada Trust Condo Poll
From March 25 to April 11, results were collected from 806 people in Vancouver, Toronto, Calgary and Montreal, through a custom online survey by Environics Research Group. 201 respondents were surveyed in Montreal. Respondents had either bought a condo in the past 24 months, intend to buy a condo in the next 24 months, or considered a condo when shopping for a home.