The condominium market in the GTA experienced a record year in 2016, with no signs of slowing down. Strong demand, low supply and rising development costs translate into an average price of $507,128, an 11.9% increase over the previous year. At the end of 2016, 54,731 condominium units under construction throughout the GTA were scheduled for completion in the next 4 to 5 years. For those buyers, a lot can change in their lives as they wait for the condominium they purchased to be complete.
There are a couple of things that these purchasers need to be aware of: interim occupancy and interim condo fees. When you purchase a house, the mortgage rates are locked in at the time of signing, but this is not the case when purchasing a condominium under construction. These buyers face the risk of rising rates or tightening mortgage rules that can create significant financial challenges as they wait for their unit to be completed.
Even getting occupancy doesn’t mean you’re finally beginning to pay off your mortgage, and interim interest occupancy payments are common. Legal title doesn’t exist for these homeowners and could take 6 months to a year from the first day of occupancy, so during this time you will continue to pay what is essentially rent on your unit (as high as $1,000 per month).
The second risk these purchasers face is interim condo fees. In order for new condo projects to stay competitive, buyers could be faced with higher condo reserve funds during that first year of operation.
With record condominium construction in 2016, the demand will likely continue to be strong in 2017 with completion set for 2021. For those thinking about purchasing in the future, expect mortgage rates and condo fees to rise. It pays to keep yourself informed on these rates.
When you’re looking for mortgage advice, you want a professional with strong knowledge of the GTA housing market. If you’re searching for a mortgage agent in Brampton, book your appointment today and let’s meet and discuss the many options available.
