Single-income household - how much condo would you buy?

[konfusion666]

If you were a single-income household, making about the avg. income (say $50k to $60k, so use $55k as an example), how much would you spend on a condo?

Let's say you work in a field which appears to still be perfectly stable, even in the recession - and you've got enough downpayment (and then some) for a 20% downpayment to skip CMHC fees.

I know what you will say... depends on a whole host of variables and personal lifestyle aspects... so tell me what you personally would do.

[pitz]

$90-$125k. No more for a condo. Especially in this market where there's an epic glut. There's not a reason in the world why prices should be any higher than those of the mid 1990s.

[AllWheelDrift]

I'd aim for 3x gross income, which would be $165k, but that probably doesn't get you much. Some people would suggest up to 5x gross income which would be $275k but that seems way too high for my taste.

[pitz]

When I say $90-$125k, I am, of course, referring to an average condo. Not a dump somewhere in the middle of a ghetto that is in desperate need of maintenance.

3X, maybe 4X income (at the most) would be more suitable for a detached house in most of Canada. Personally I wouldn't do the full 3X multiplier on a condo.

[EugW]

$90000 in Mississauga will get you a closet in a crackhouse.

[pitz]

$90000 in Mississauga will get you a closet in a crackhouse.

Yeah, completely unsustainable. I've seen houses in Mississauga that would fetch, at the most, $250-$300k in Houston or Atlanta, go for ~$1M. With that kind of pricing, the GTA is a clusterf*ck waiting to happen.

[konfusion666]

$90000 in Mississauga will get you a closet in a crackhouse.

Hehe... not in 'Sauga. Probably something on the Yonge-University subway line.

Even better would be near my office, which is located in North York's "condo alley". That would reduce my "commute to work cost" from about $400 (gas + parking) to $0.

[caliente]

This is what I'm aiming for:
Salary $50,000
Downpayment 20% (to avoid CMHC fees and rules)
Purchase price ~ $295,000

[speedyforme]

Isn't Yonge University more expensive than Sauga? I would those condos there would cost around the same as a decent townhouse in Miss.

[playanav]

Rent

[pitz]

This is what I'm aiming for:
Salary $50,000
Downpayment 20% (to avoid CMHC fees and rules)
Purchase price ~ $295,000

Ummm 1/3rd your salary wouldn't even cover the interest expense on such a condo, lol.

[JAC]

This is what I'm aiming for:
Salary $50,000
Downpayment 20% (to avoid CMHC fees and rules)
Purchase price ~ $295,000

That leaves you with a mortgage of $236,000. With a 25-year amortization and an interest rate of 3.5%, that gives you a weekly payment of $272.

With an After-Tax Income of approximately $40,000, you take home about $770 weekly, leaving you $500 a week after mortgage payment. If you don't plan on owning a car, you might be able to pull it off.

[EugW]

Isn't Yonge University more expensive than Sauga?

Yes.

[Rehan]

Back in '99 when my wife and I were double-income-no-kids with total income about twice that, we were looking at condos at around the $120k-130k price point. Ended up getting a semi-detached for more than that, though.

Today, those same condos are $170k-$180k. That's still what I would choose for a condo... You can find cheaper places in Mississauga, but not where I'd want to live.

Good luck finding something in that price range near your work, though. Along Yonge or University, you'll be looking at $200k+.

[pitz]

That leaves you with a mortgage of $236,000. With a 25-year amortization and an interest rate of 3.5%, that gives you a weekly payment of $272.

You really think that interest rates are going to remain that low over the full 25-year amortization?

With an After-Tax Income of approximately $40,000, you take home about $770 weekly, leaving you $500 a week after mortgage payment. If you don't plan on owning a car, you might be able to pull it off.

You forgot condo fees, utilities, depreciation, etc.