I would never buy a condo! How many times have I heard a client say this to me when we first start seeing some homes together? Yet take a look at all the cranes in Toronto, and also closer to home, you start noticing that we are building up, and not out. The demand from buyers is there, and given that our hands are tied in bureaucracy, we are seeing more and more condos filling our sight lines. But you know what? It's a great sign of our strong economy, and it also happens to be a great option for many people who simply don't have the time, energy or money to invest in a freehold home. Condo construction represents a huge boon to our economy. The list of services employed in the construction of a condominium is as surprising as it is staggering: HVAC, Plumbing, Electrical, Cable, Concierge, Security, Elevator, Designer, Contractors, Engineers, Lawyers, Pool Specialists, Cleaning Staff, Painters, Flooring, Mat Service, Window, Roof, Landscaping, Energy Auditors, and on and on. Not to mention dental offices, restaurants, coffee shops, fitness clubs, grocery stores, all businesses that can be found in condominiums. Buying a condominium actually contributes so much more than just a roof over our heads, it's a massive boon to our own economy. Of course a lot of these industries and businesses participate in the construction of freehold dwellings, thereby contributing to our economy in similar ways. The usual objection to buying a condominium is almost always centered on the perceived notion that one gets nothing in return for the fees paid, and that they only ever go up. Feel free to use the Globe And Mail handy calculator to determine for your situation whether this statement is true or not, but there is no denying the financial return we all get from people buying more and more condos. So be sure to thank someone who just bought a condo! :-)
I've been getting a lot of questions about the state of our housing market, and the potential ripple-effect coming from south of our border. There are some frightening things happening there (consider the recent $700B bailout proposal of the financial sector), that we are insulated against, as a result of tighter lending practices and more control over the sub-prime market. While close to 35% of loans in the US are in the sub-prime market, in Canada it's only 5%. It is estimated that in the US there is a 12 month supply of new homes on the market at the moment.
Fortunately there are steps being taken to avoid a similar situation as what's happened in the US and now in the UK, as I touched on in my September newsletter. 100% financing will no longer be available beyond the middle of October, and purchasers must have a 5% downpayment for a home. It has been shown, that lowering the downpayment requirement from 10% to 5%, will double the likelihood of a default on a house. Just how much incentive do you think there is, for someone to continue to make payments on a home that is 100% financed?
I'd love to hear your thoughts on this, shoot me an email at firstname.lastname@example.org
Buying and Selling Residential, Condominium and Investment real estate in the Waterloo Region since 2008. Oh, and also Ottawa! :-D