Townhomes, Often Overlooked Real Estate Value
Tuesday Jan 22nd, 2019
Are townhomes as both an investment and an affordable alternative to detached homes being overlooked? Quite possibly for the investment and almost certainly for living in it for a family of four. Let's face it, many home owners aspire to have a fully detached home with a fenced yard big enough for 'Rover' to run around. But when it comes to affordability for a family of 4, a 3 bedroom townhome may be the best alternative there is. Consider the average price of a detached home in the popular community of Erin Mills in west central Mississauga being $1,009,923 of 105 detached homes sold between July 1st 2018 and January 22nd, 2019 compared to a median price of $616,420 on 61 condo townhomes sold in the same period. $393,500 difference equates to approximately $1900/mth in additional carrying costs. Keep in mind there is a maintenance fee with a condo, but these fees often help cover normal wear and tear maintenance items that you will ultimately have to repair on your freehold home. The fee's often cover all common area maintenance such as lawn and garden care, snow removal, road and driveway maintenance, and fence repair. They sometimes can include windows, roof, skylights, doors, exterior repair and maintenance, swimming pool maintenance (if the complex has one), and cable packages. I have many clients who come to me wanting to move to a freehold property looking to eliminate the maintenance fee - I can tell you that one way or the other you will be paying a maintenance fee. Whether it is through a Condo Corp or by making repairs to your own freehold property (the biggest benefit of a freehold is more control of where and how the money is spent). Townhomes with condo fees often do ensure a more consistent look within the complex, matching doors, windows and roofs and generally a more well kept appearance within the complex
Let's take a look at the investment side of the equation over the last few years. We'll simply compare the average price for the last 6 months of 2016-2018 for both detached homes and condo townhomes in Erin Mills and then calculate the increase on your investment on average. For readers who want to more thoroughly vet these stats, I will admit there are micro-markets (meaning certain complexes or specific types of towns or detached) that produce different results than others, but this is meant to be a rough comparison.
The results may surprise some. I have had my finger on the pulse of this Erin Mills market for the last several years and it doesn't surprise me at all. Detached homes have had an average increase when comparing pricing in the last 6 months of each year between 2016 to 2018 of just 5.7%. Townhomes in the same time frame have increased 21.1% showing that there is not only a demand for these units but that the investment has proven better as well.
|Last Half 2016||954,687||502,156|
|Last Half 2017||973,435||563,561|
|Last Half 2018||1,008,889||607,924|
Some may ask, why I used only the last half of the year. The simple answer is we had a hugely inflated period of the first 4 months of 2017 and I don't feel it represents a true gauge of the condition of the market. And this is why when I am asked about the record-breaking sale I made in 2205 South Millway, I always preface it with "it was in the height of that crazy market in 2017". It was $200,000 more than next nearest sale up to that point. Two years later, that record still stands. As long as a potential Seller is not unrealistic and expect similar money as the first quarter of 2017, they will achieve an excellent return on their investment in this Erin Mills market.
As always I am available to discuss your individual situation and advise accordingly.
All the best for 2019!