Condominiums in Canada are a relatively new phenomenon of property ownership. They first appeared in the late 1960’s in the Great White North.
Clearly as the above 1974 photo of the Toronto CN Tower Under Construction you would be hard pressed to locate any condos whatsoever.
Yet today, “One in eight Canadian households lived in condominium dwellings, mostly located in a few census metropolitan areas according to Statistics Canada.”
“Condominiums exist in most parts of Canada though more common in larger cities.”
“The townhouse complex of Brentwood Village in Edmonton, Alberta, was the first condominium development in Canada (registered in 1967).”
“Technically, a condominium is a collection of individual home units and common areas along with the land upon which they sit.”
So how much maintenance fees can you hope to pay living in a 40 year old condo? The Willowdale are of Toronto, expect to pay between $700-900 per month in maintenance fees for 1 bedroom 1 bath 40 year old condo.
Even if there was no mortgage on the property, after adding applicable property taxes and possibly some utilities to your monthly maintenance fees you will discover why you would effectively be paying near market rental rates on a 1 bedroom unit that you are not renting but instead actually owned!
This same condo can currently be purchased in the $230K range, whereas newer condo units of this size in the area go for over $400K.
Worse, as a high rise condo unit owner you are mainly the owner of “air space” the boundaries of which are conjured up out of thin air.
Mark Twain said: “Buy land, they’re not making it anymore.”
This may be true, but someone obviously thought of a way to create home ownership in the air.
“Individual home ownership within a condominium is construed as ownership of only the air space confining the boundaries of the home (Anglo-Saxon law systems; different elsewhere). The boundaries of that space are specified by a legal document known as a Declaration, filed on record with the local governing authority.”
If you are considering buying a condo unit as your own personal lifestyle choice for your housing needs and wants and love the location, amenities and other benefits available to condo unit owners, that is a totally separate matter altogether. I get how this may appeal to many empty empty nestors looking to downsize or those looking to be right in the middle of the urban lifestyle they desire.
However, last time I checked, I don’t recall ever having to pay for air. So why is it that over 1 in 8 Canadian households feel that air as a real estate investment makes sense?
Now if you ever hear that the real estate market is in bubble territory, you can be sure that the bubble they are talking about most likely resides in those condo units in the sky. When a real estate bubble eventually bursts, as all asset bubbles eventually do, the prices of condo units will be among the very first to fall from the heavens.
This is why I truly believe that condos as long term real estate investments, as differentiated from a lifestyle choice of living space, are a bad idea.