For years, if you wanted to see creative small spaces you had two places to look: trailers and boats. With a growing population in the city of Toronto people are trading space for location if they want to live in the downtown core.
Currently under construction at 219 Queen St. West is the 256 suite condo development called Smart House. Sales for available units start at $422,500 to over $590,100. Not all of the units in the building are micro condos.
Toronto’s population, according to Stats Canada was 5,769,800 in 2011 and in 2014 had grown to 6,055,700. Downtown is by far the most densely populated area in the GTA but certainly does not account for the largest footprint. People want to live downtown; particularly young people. Transportation is excellent, there is lots of entertainment within close walking distance and there is, of course, the “vibe” that only an inner city has. So, it stands to reason that with a growing population in a stagnant geographical space, housing is at a premium.
The average price of a detached home in the 416 area of Toronto is now $1,040,018. Average for a semi-detached is $702,035 and a townhouse $507,843. The average price for a condo in the 416 exchange is $369,655.
The average per square foot cost at Smart House is $830 per sq. ft. And the anticipated maintenance fees are .58 per sq. ft. per month. The current average Toronto price per square foot for new condos is $560. The average maintenance fee is .50 per sq. ft, according to the Toronto Star.
Micro living is defined as any living space less than 500 square feet. Some 467 units of 500 square feet or less are currently in the occupancy phase in the City of Toronto, about five per cent of the new condos coming on stream in the core this year, according to condo research firm Urbanation. In additional 2,868 of these smaller units will be occupied by the end of 2015. Thousands more are in the planning or construction phases.
Buyers occupy the units they have bought prior to the registration of the condo and pay an occupancy fee during this phase as a kind of rental fee. A Title to the property is not obtained until the building is registered and banks will not grant a mortgage until Title is received. Consequently, mortgages are not needed until after a building is registered and will be for approximately the remaining 80% of the purchase price owed by the purchaser. Banks currently only want to grant mortgages to units above 500 sq. feet. Therefore, it will be some time before the bank’s willingness to mortgage a property under this benchmark is determined.
So all of these stats beg the question: “Would purchasing a micro condo be a good investment?”
Well, not to be too oblique, but it depends on your willingness to risk. Frankly, as a real estate representative it is incumbent upon me to warn that the purchase of any real estate is a risk from a strictly financial point of view. Having said this, there are bigger and smaller risks. From least to most risky of purchases, in my opinion: detached houses, semi-detached houses, attached houses, free hold townhomes, condos, micro condos. I need to point out that the difference between the first four types is small. I am aware that there are lots of people who have made lots of money buying pre-sale condos but my order remains the same as some of that profit was due to the greater up front risk inherent in buying an idea on paper a couple of years prior to actuality.
While I consider the investment aspect of a buyer’s purchase to be my major responsibility as an agent, I am certainly aware that it is not the primary reason buyers choose what they choose. After all, I’m not going to be living there and people buy their homes to live the lives they envision living. For some, this will be micro condos. I think that’s great, just so long as investment is not the primary reason for the purchase and providing it is understood that there are financial risks in this kind of purchase and lastly, that they are being sold in the luxury category.
After all, there are other reasons to choose to live smaller which involve a different kind of investment than financial.
If you are interested in smaller living please contact me at firstname.lastname@example.org or directly at 416-708-0556.