This is the second in a series of stories looking at the challenges faced by different generations of people who are in the market for a home – from first-time buyers, to growing families, to boomers who are downsizing.
A single person buying a home has a particular financial and emotional calculus. And Michele O'Keefe is no exception.
Location is tantamount for her. As the executive director of Canada Basketball, the sport's national governing body, she works in an out-of-way office in Toronto's Etobicoke suburb. Her commute by car is enough driving for the week. When she's home, she wants everything from markets to coffee shops and parks in close walking distance. She wants the condo lifestyle.
And as a single professional, that lifestyle and the condo price still have to be within her means.
For many professionals in Toronto and other booming Canadian markets, a condo is the only option if they want to buy. Houses are out of reach. As Toronto mortgage agent Matt McKillen with Mortgage Architects noted, the gap between buying a condo and a detached or semi-detached house in comparably desirable neighbourhoods has widened to $300,000 and more. As a result, many of his clients are moving from one condo to another, building their home equity, rather than the traditional route of moving from a condo to a house.
While it is easy to over-generalize about home-buyer demographics, there are trends: For single urban professionals in their middle adult years, the hot demand in the biggest cities is for condos around the $400,000 range, in buildings with character, in appealing neighbourhoods and close to transit (or in Ms. O'Keefe's case, a quick shot by car to work). When describing this to realtors on the phone, you can easily picture them rolling their eyes. They hear this every day.
Yet, single professionals have another interesting characteristic: They tend not to be in a hurry to buy. They wait until they find what they want. They often don't have the same sense of urgency of parents suddenly needing more room to accommodate a growing family, or aging empty-nesters requiring a home that's more manageable.
Ms. O'Keefe had been checking listings for a long time. Renting in the densely populated, uptown Toronto pocket of Yonge and Eglinton, her priority was to wait until she found a place that ticked all the necessary boxes, which an uncompleted condo finally did in the new Canary District neighbourhood by the lake shore.
"I've always found that the commitment to purchase a home was daunting. Life is very different when you're single, as opposed to a couple who share the expenses," Ms. O'Keefe said.
As part of the athletes' village for the Pan American Games this summer in Toronto, Ms. O'Keefe's condo building won't be ready for her until June of 2016. At around $450,000, her new two-bedroom apartment will face west onto an elaborately designed brand-new neighbourhood, which was previously an abandoned postindustrial edge of the downtown.
Ms. O'Keefe had a particular list of desires behind her decision. She didn't want to go above $500,000. A lot of fancy amenities weren't a must. Coming from a rental apartment, she's mostly glad her new condo will have a washer and dryer within her space, not the basement. She also wants a place that will appreciate in value.
"To me, this is perhaps a late investment in my future. And whatever happens in the future, retirement or planning for a retirement – perhaps I'm a little late in the game – but it's my effort to get that sort of stuff in place," she said.
Condo buying is not just about price and the accompanying maintenance fees. It's also about affording the coffee shops and numerous attractions of the surrounding neighbourhood. That's something single condo buyers need to bear in mind, said mortgage agent Sydney Dookwah, with Sherwood Mortgage Group in Toronto.
The old rule of thumb is that mortgage and debt should not exceed 40 per cent of one's income. "That's definitely the banks' guidelines. But we like to stress to clients that you still want to be able to have and maintain a certain level of lifestyle," she said. Even seasoned renters should carefully look at more than mortgage payments and fees, but also budget in the cost of the new neighbourhood.
"Condos are all about lifestyle," concurred Vancouver realtor Adina Dragasanu. The main reason for buying isn't just the condo itself, although important, but the surrounding neighbourhood.
One of her recent clients in Vancouver, Bridget Martin, bought a one-bedroom condo in an old, heritage house which had been subdivided into several units. It is near City Hall and, most importantly, the Skytrain's Canada Line, allowing her an easy subway commute to her job as a controller for a sports marketing company. Ms. Martin, 27, had previously been living on the North Shore.
"I put an offer in the day I saw it, and that was the day it came on the market," she said. The top-floor condo has soaring ceilings and an old house feel. It's a surprise when walking through the front door that the house is broken up into apartments, Ms. Martin said. The owners were asking $360,000, and she paid $350,000. Her maximum while looking for a place had been around $420,000.
As with Ms. O'Keefe, amenities aren't a big issue for her. The house has few – no gym nor other condo accoutrements except for a washer and dryer and dishwasher in the units. That means her strata fees are just $100 a month. "That was a huge selling feature for me."
If she moves out one day, she would ideally like to keep the condo and rent it out. Also like Ms. O'Keefe, she sees it as an investment as much as a home. She made a hefty down payment of 35 per cent in order to keep her monthly mortgage relatively light.
A short walk away in Vancouver, by the corner of Ontario Street and Broadway, Chelsea McCooey also sees her new condo as an asset as well as a home. She is opening a meditation centre close by and wanted to be near it. She was also looking in the $400,000 range for a place with charm, character and investment potential. Her realtor, Ms. Dragasanu, knew the routine.
Like the others, she was just exploring her options, still unsure of whether to rent or buy, when she suddenly found her ideal place, a studio on the fourth floor with a scenic view of False Creek for $386,000. It had been originally listed at $420,000.
Also like the others, location and resale value were major factors in the final decision. And a willingness to wait for the right condo has another plus: It allows time to find the best combination of price and investment potential.
"The realtor laughed at me, because usually people are all stressed out about this stuff," Ms. McCooey said. "But because I had no preconceptions and had never bought before, I was, like, 'This is fun, let's offer them this!'
"And she went, 'You're not stressed out?' And I went, 'No, I'm a meditation teacher.'"