Should I Buy a Condo Before a House
September 7, 2019 | Posted by: Ron Chan
This is a very common question for those entering the real estate market for the first time. On the surface, most first time buyers assume that a condo is the way to go, but there are a few key things to consider before making your final decision. Here they are.
5 Things to Consider When Trying to Decide Whether to Buy a Condominium or House for Your First Mortgage
1. Current (and Near Future) Lifestyle
If you’re buying a home to live in, try not to get too wrapped up in the “residential investment” aspect of it all, and focus first on the lifestyle you have today, and the one you expect to maintain in the near future. That should weigh heavily on your decision if overall happiness and quality of life are key qualifiers.
For instance, we talk a lot about the live/work/play (LWP) concept. LWP is for those who want to live near their place of work and leisure alike, and is very evident in certain mixed residential/commercial communities. Millennials are flocking to condo development zones in Tuxedo Park, while tech and finance professionals alike are looking to condominiums and warehouse conversions in the budding Exchange District. We even wrote an article recently about where to live in Winnipeg if you’re a big sports fan. On the flip side, if you have a family on the way and you want your children to be located near a great school and neighborhood they can grow up in, a single detached home may be more appropriate.
Simply put, your first home should suit the lifestyle you expect to have over the next five years or so, or you may find yourself living in a perpetual cycle of inconvenience.
2. Average House Prices for the City You Live In
When there are large price discrepancies between detached homes and condominiums first time buyers often lean towards the latter. This is very typical of Vancouver and Toronto. But when it comes to Winnipeg you don’t have to concede your dreams of a detached home as average house prices here are lower than all major city centers in Canada. At the end of the summer, the average house price in Winnipeg is just $304,605. Compare that to the average condo price of $257,101 and you’ll see that price is not the same deciding factor as it is any other Canadian metropolis. In Winnipeg, you don’t have to buy a condo before a house, if you don’t want to.
3. Favorable Fixed Mortgage Rates?
Given that you’re asking about whether you should buy a condo before a house, you probably have you sights set on a house in the near future, when you can better afford it. But do you really have to wait to enter into your longterm investment (a detached home)? Not when fixed mortgage rates are hitting rock bottom. When low, you have the opportunity to lock in and score budget-friendly monthly mortgage payments on a house, as low as you probably expect to pay on a condo. At press, 5-year fixed mortgage rates have plummeted tojust 2.64 percent for low risk buyers, and just over 2.8 percent for higher risk buyers - either of which are extremely favorable rates. If it’s just finances that have you on the fence when deciding between a condo and a house, you may as well opt for the latter because it really can’t get much better than this.
4. How Much Maintenance Are You Prepared to Do?
This qualifier comes down to how much physical effort you want to put into your property. A condo is easier to maintain and in many instances you can depend upon strata to take care of utility issues when they are not isolated to your suite and instead connected to the building itself. A house however, requires much more upkeep when it comes to landscaping along with exterior and interior maintenance.
5. Other Monthly Cost Factors
You have to factor strata fees into your monthly mortgage payments on a condo, but in addition to covering building and property maintenance, they may also allow you access to amenities (fitness facilities, entertainment rooms, etc.) which you may otherwise spend disposable income on. In addition, you will spend a lot less on utilities in a condominium versus a detached house. Property taxes and insurance are also lower on a condo. A house on the other hand, has many more unexpected property concerns popping up over the years of ownership, and if you’re not careful, utilities can run you into the poor house. That said, energy efficient retrofits are an investment that can drop the cost of utilities on a house down towards what you would pay on an older condominium. Make sure you factor in these monthly cost considerations when pondering the best direction for your first home.
Whatever you decide it’s a good idea have someone at your side to walk you through the entire mortgage process. If you’re considering a home (any home) in the greater Winnipeg area, contact Ron Chan today at 204.290.9950.