Real estate in Calgary - another bubble?

[DoubleF]

Originally Posted by Wormius

I will never understand condo maintenance fees. It’s one of the things that is a bit off-putting from buying a condo. You could practically rent a condo for the amount you’d pay in condo fees and property taxes.

My old condo had fees that covered insurance of the outside/common area, hot water, water, sewage, garbage, elevator, basic security/intercom, landscaping and snow removal on common property, storage spaces etc. Others have gyms, heated garages, extra security, rentable common spaces like rec rooms/rooftop sitting areas, AC etc. Once you pay off the mortgage, it's still cheaper to pay those fees than rent.

It's also a forced savings via reserve fund for future work that may be required. It's not like you get nothing for those fees.

It kinda makes sense for certain common shared spaces and maintenance. For the spaces you don't use, I don't see it as too much worse than owning a larger home and having spaces you underutilize like an undeveloped basement and still kinda pay for the area (electricity, heat loss etc).

[Johnny199r]

Originally Posted by DoubleF

My old condo had fees that covered insurance of the outside/common area, hot water, water, sewage, garbage, elevator, basic security/intercom, landscaping and snow removal on common property, storage spaces etc. Others have gyms, heated garages, extra security, rentable common spaces like rec rooms/rooftop sitting areas, AC etc. Once you pay off the mortgage, it's still cheaper to pay those fees than rent.

It's also a forced savings via reserve fund for future work that may be required. It's not like you get nothing for those fees.

It kinda makes sense for certain common shared spaces and maintenance. For the spaces you don't use, I don't see it as too much worse than owning a larger home and having spaces you underutilize like an undeveloped basement and still kinda pay for the area (electricity, heat loss etc).

There can always be the issue of what if you buy a condo that has artiricially low condo fees because of all the cheapos on the condo board (not uncommon) in a building that is prime for big projects (20+ years old). It's possible that due to bad luck, you move in and get slapped with a big special assessment.

The other big fee for every condo owner is realtor/transaction fees for buying/selling the place.

5% of 320k is a lot of rent money.

Having to shell out Money in either of those scenarios is never going to be the problem of a renter.

You still get the benefit of amenities by renting.

[DoubleF]

Originally Posted by Johnny199r

There can always be the issue of what if you buy a condo that has artiricially low condo fees because of all the cheapos on the condo board (not uncommon) in a building that is prime for big projects (20+ years old). It's possible that due to bad luck, you move in and get slapped with a big special assessment.

The other big fee for every condo owner is realtor/transaction fees for buying/selling the place.

5% of 320k is a lot of rent money.

Having to shell out Money in either of those scenarios is never going to be the problem of a renter.

You still get the benefit of amenities by renting.

I think people have to be out of their minds to buy a condo.

Perhaps I kinda misread the previous post. In Calgary right now, I totally understand the argument that buying a condo or townhouse right now seems kinda silly with how low some of the rents are. I was mainly saying that you get stuff for your condo fee and bringing up that it might make sense to own for others in different circumstances or scenarios.

We are unlikely to boom any time soon, but my old condo once rented out for more than double what it rents out for now. Some people don't want that to happen to them like how this might happen in hot markets like Vancouver or Toronto. But I doubt the risk for that in Calgary is very high.

Rent vs own, the throw away costs in typical owning vs renting are basically property taxes, mortgage interest and a little bit of the condo fees (not insurance, utilities etc). Yes the trade off of control land lord vs self is quite balanced right now, but in future it could tilt unfavorably to a renter.

The selling commission I think is actually closer to 3% than 5%, but it's probably offset by a principal place of residence exemption for tax purposes in terms of taxes on a similar investment gain. The real question about owning vs renting is often better boiled down to control and responsibility IMO. There's other factors sure, but usually they're kinda subsets of those two. A special assessment is generally because not enough was put away for something to be repaired. Plenty of people don't put away enough for a repair on their home, but we seemingly view many "costs of owning a home" differently than a cost of owning a condo.

[Wormius]

Originally Posted by DoubleF

My old condo had fees that covered insurance of the outside/common area, hot water, water, sewage, garbage, elevator, basic security/intercom, landscaping and snow removal on common property, storage spaces etc. Others have gyms, heated garages, extra security, rentable common spaces like rec rooms/rooftop sitting areas, AC etc. Once you pay off the mortgage, it's still cheaper to pay those fees than rent.

It's also a forced savings via reserve fund for future work that may be required. It's not like you get nothing for those fees.

It kinda makes sense for certain common shared spaces and maintenance. For the spaces you don't use, I don't see it as too much worse than owning a larger home and having spaces you underutilize like an undeveloped basement and still kinda pay for the area (electricity, heat loss etc).

I don’t disagree that there are benefits. I look at some condos with limited amenities and compared to other places, Calgary is probably twice what you’d pay if you were considering cities in BC. I don’t know where the discrepancy is from. It doesn’t seem to correlate to price or square footage.

https://www.realtor.ca/real-estate/2...ection=details

https://www.realtor.ca/real-estate/2...ection=details

vs

https://www.realtor.ca/real-estate/2...ection=details

https://www.realtor.ca/real-estate/2...ection=details

[Ahuch]

Originally Posted by Wormius

I don’t disagree that there are benefits. I look at some condos with limited amenities and compared to other places, Calgary is probably twice what you’d pay if you were considering cities in BC. I don’t know where the discrepancy is from. It doesn’t seem to correlate to price or square footage.

https://www.realtor.ca/real-estate/2...ection=details

https://www.realtor.ca/real-estate/2...ection=details

vs

https://www.realtor.ca/real-estate/2...ection=details

https://www.realtor.ca/real-estate/2...ection=details

The biggest line items in the budget for my rental condo are basically:

• Natural Gas / Electricity (Heating, Common Areas)
• Insurance
• Water
• Snow Removal / Landscaping
• Property Management

[bizaro86]

Originally Posted by Wormius

I don’t disagree that there are benefits. I look at some condos with limited amenities and compared to other places, Calgary is probably twice what you’d pay if you were considering cities in BC. I don’t know where the discrepancy is from. It doesn’t seem to correlate to price or square footage.

https://www.realtor.ca/real-estate/2...ection=details

https://www.realtor.ca/real-estate/2...ection=details

vs

https://www.realtor.ca/real-estate/2...ection=details

https://www.realtor.ca/real-estate/2...ection=details

$700 for a 2 bedroom is higher than normal for Calgary though. That $400-500 range that you have for BC would be more typical.

[getbak]

Given its location, I'd guess the one in Chinatown probably suffered significant damage during the flood and likely saw their insurance costs skyrocket because of it.

[The Yen Man]

Typically, condo fees I've found reasonable would be ~$0.50 per sqft. If I were looking to buy a condo, I'd typically stay away from older condos, and ones that have a pool. Pools are money pits, and can cost a lot to maintain, which means higher condo fees. There's a reason why older condos sell for so much lower vs. other real estate. They're oftentimes saddled with high condo fees, and you risk having a special assessment.

I guess a special assessment is really not that much different than if you bought an older house and had to put significant money into fixing it up. People do tend to think of condo special assessments as not directly benefitting them as much because it's used to fix a communal building, rather than going towards your own house.

[bizaro86]

Originally Posted by The Yen Man

Typically, condo fees I've found reasonable would be ~$0.50 per sqft. If I were looking to buy a condo, I'd typically stay away from older condos, and ones that have a pool. Pools are money pits, and can cost a lot to maintain, which means higher condo fees. There's a reason why older condos sell for so much lower vs. other real estate. They're oftentimes saddled with high condo fees, and you risk having a special assessment.

I guess a special assessment is really not that much different than if you bought an older house and had to put significant money into fixing it up. People do tend to think of condo special assessments as not directly benefitting them as much because it's used to fix a communal building, rather than going towards your own house.

Yeah, people dump all over condo fees, but the windows on my house were a five figure bill. Paying it monthly in reserve fund contributions is probably better for most people.

I think $0.50/square foot is probably a bit light to be sustainable in the current insurance market, but $0.60-$0.65 is doable.

[tvp2003]

I'd be interested to see if it's just a certain segment of the market (i.e. detached homes under $500k fuelled by people in condos wanting more space + yard) versus the market overall.

That would seem to be the biggest thing with the pandemic: growing families + stuck in a 2BR = need for more space.

[I-Hate-Hulse]

nm

[I_H8_Crawford]

Originally Posted by tvp2003

I'd be interested to see if it's just a certain segment of the market (i.e. detached homes under $500k fuelled by people in condos wanting more space + yard) versus the market overall.

That would seem to be the biggest thing with the pandemic: growing families + stuck in a 2BR = need for more space.

I can honestly say that inner city homes/duplexes are selling for at or usually below asking.

The place we ended up buying we bought at asking but got a bunch of extras thrown in. I think it's the burbs where you are seeing prices move above asking.

[jwslam]

Originally Posted by tvp2003

I'd be interested to see if it's just a certain segment of the market (i.e. detached homes under $500k fuelled by people in condos wanting more space + yard) versus the market overall.

That would seem to be the biggest thing with the pandemic: growing families + stuck in a 2BR = need for more space.

Pandemic fueling the boom of condos upsizing is definitely a factor. The same family who suddenly saved a bunch of money for downpayment is another. No vacay, no restaurants, lowered gas bills, no walking by starbucks and grabbing a quick coffee, no casinos, no parties & therefore no gifting... Pretty good on the wallet.

Detached $400-600k is always hot.
-Good for upsize from condo / townhouse
-It's the Price point for people who were in $600k plus dual income who have now dropped down to single income
-Good size for empty nesters who no longer need 5 bedrooms

In car talk:
Similarly which is easier to sell?
-Toyota Yaris
-Honda CR-V
-Mercedes GLE
You can "fit" 5 people in all of these. But which is the best bang for buck?

[Deegee]

Originally Posted by Johnny199r

People aren't thinking about the possible return to the office this year or next. They also aren't thinking about interest rates ever rising, needing financial breathing room in case of illness or divorce, saving enough for retirement, or really anything else as long as they can make the monthly payments. It's only about right now. They'll figure out how to make competitive hockey for the kids and annual vacations to Mexico still work with a $650,000 house, no worries there.

To clarify my point was more about the doom and gloom predictors of when interest rates rise. There are already tools in place to mitigate that risk for the existing borrowing out there.

I'd be surprised what data you have to back up your scenario above. I've been involved with retail credit for years (14 plus), still am, and see maybe a third of the credit deals come in as above.

The worst deals by far come from the broker channel and it's not even close. Branch deals seem far more reasonable. Broker deals always have the borrower extended as far as possible.

[Jay's Beagle]

Originally Posted by tvp2003

I'd be interested to see if it's just a certain segment of the market (i.e. detached homes under $500k fuelled by people in condos wanting more space + yard) versus the market overall.

That would seem to be the biggest thing with the pandemic: growing families + stuck in a 2BR = need for more space.

We were one of those couples to benefit off of the pandemic as we owned a condo with a dog. We wanted more space for our dog and for us as we are eventually going to be having a family. So with that said we kind've are apart of your hypothesis and growing family and stuck in a 2 BR.

We sold our condo in February and took a bath on it. We werent happy about losing as much as we did although we were happy to get out. We were tired of our condo board. We bought the end of February so we got lucky as the market was just getting hot. Our real estate agent, after me being a pain in the butt, emailed other agents to see if they had anything coming up. Our house did and we have been so happy.

[Ahuch]

Originally Posted by Jay's Beagle

We were one of those couples to benefit off of the pandemic as we owned a condo with a dog. We wanted more space for our dog and for us as we are eventually going to be having a family. So with that said we kind've are apart of your hypothesis and growing family and stuck in a 2 BR.

We sold our condo in February and took a bath on it. We werent happy about losing as much as we did although we were happy to get out. We were tired of our condo board. We bought the end of February so we got lucky as the market was just getting hot. Our real estate agent, after me being a pain in the butt, emailed other agents to see if they had anything coming up. Our house did and we have been so happy.

Smart move IMO. I've been renting mine out while trying to cut my losses and it's a pain at times haha

[Calgary14]

Come to think of it, I actually can't think of one condo owner (in Calgary) who has either made a profit or broke even by selling in the past few years. Maybe anyone who has owned for quite a while would be able to break even but everyone I know that's sold has taken a loss.

Definitely not the same for anyone I know who's sold a detached house

[flamesfan1297]

When you guys use the term "condo" what exactly does that refer too? Is it only called a condo if it has condo fees, or what defines something as being a condo? I just recently bought a townhouse, (no condo fees) I assume this would be classed as something else?

[Ahuch]

Originally Posted by flamesfan1297

When you guys use the term "condo" what exactly does that refer too? Is it only called a condo if it has condo fees, or what defines something as being a condo? I just recently bought a townhouse, (no condo fees) I assume this would be classed as something else?

Would be anything with a Condominium Corporation, which if you have no fees I assume you're more in a duplex type situation.

[jwslam]

Originally Posted by flamesfan1297

When you guys use the term "condo" what exactly does that refer too? Is it only called a condo if it has condo fees, or what defines something as being a condo? I just recently bought a townhouse, (no condo fees) I assume this would be classed as something else?

Pretty sure those are call street homes / row house...

Townhouses as per above have:
-A governing corporation that takes monthly fees
-Governing rules that prevent you from, for example, painting your home's exterior a colour unique from the other attached homes
-Usually pay for snow shoveling of common laneways, visitor parking spots, etc, sometimes mowing
-A common greenspace that the maintenance fees take care of