Real Estate

Looking for input - Condo > House dilemma

  • Last Updated:
  • Nov 3rd, 2020 11:29 pm
[OP]
Sr. Member
May 13, 2009
509 posts
14 upvotes

Looking for input - Condo > House dilemma

Looking for some input on my situation.

Currently: Own two condos, one in North York, one in downtown Toronto.
- Living in the downtown unit.
- North York is currently rented out, with what seems like a happy stable tenant.

Goal: Looking to buy a small house and start a family - likely in the suburbs (Markham, Richmond Hill, Thornhill).

Currently, between my SO and I, we don't have enough liquid cash for the down payment for a house so we intended to sell our downtown condo since we were living in it anyways and upgrade to a house - using the capital/upside on the condo for the down payment. We decided this back in Sep, during the early signs of the depressed condo market, but it wasn't too clear at the time so we packed up and moved back to the parents since we didn't want to do showings while being in the unit with Covid and all. The unit has been sitting on the market for about 3, heading into 4 weeks now with only a handful of showings. I'd say we are priced ok in general, and competitively in our building so just goes to show how slow it is. Note that this condo was purchased 4-5 years ago, so as you can imagine it has appreciated.

We aren't looking to 'play' the market, want to make the best decision at this time and simply move to the next stage in life. For me, this is all just bad timing where we are selling into a depressed condo market and trying to buy into a crazy house market in the suburbs. We aren't leaving downtown because of Covid19 (I love downtown and honestly would stay there if it were all up to me :P). I think we would have done this move irrespective of the pandemic around this time.

So I've come up with a few options:

Path 1 - Still look for a house, if we see something we really like, we go for it - and use other methods to cover the down payment temporarily.
1.1) Use our HELOC on the condo, all savings, and sell my stocks/investments - I'm uncomfortable with this because we'd basically have no savings left AND I'd be dipping into the other parts of my portfolio which I never wanted to touch. I've kinda ruled this out.
1.2) Use the HELOC, and some cash (not touching emergency savings, stocks) and borrow money from a family member (which we'd need to return within 12 months) - which means the DT condo needs to sell within 1 year - I'm borrowing to buy us time

Note: Between us, we have a good income and could handle the house mortgage + the downtown mortgage (w/o rent) and be okay. I did the math and if the NY condo were vacant as well, we'd be in the red and need to dip into savings, but we'd still be okay for a bit - hence my suggestion in path 1.2 where we still have the savings buffer - assuming the worst case scenario of carrying 3 mortgages.

Path 2 - Play it safe. No looking for a house until the condo sells.
2.1) Leave the unit on the market and just wait for a buyer
2.2) Give up this whole process and move back to the condo and try again when market stabilizes - last resort since living with our parents, to be frank has been a bit depressing after being out for years - but we'll live if it is the best approach.

My gut tells me 2.1 is our path to go, but I've felt pressure from my SO to get back to our own space so I've trying to figure out what else we can do.

Any input and ideas would be much appreciated.
27 replies
Deal Guru
Feb 29, 2008
14625 posts
10863 upvotes
Wouldn't be selling that DT condo unless I had to and doesn't seem like you have to. I'd sit on it and wait for the market to turn around....that could be a 100K+ difference which would help you for a DP.
Jr. Member
Apr 25, 2017
158 posts
121 upvotes
I think you're absolutely correct. You're going to be selling into a depressed condo market (especially downtown) and buying into a super hot detached market. It's a tough situation to be in tbh.

Here's my 2 cents - I'd move back into the downtown condo and push out your plans 2-3 years when the market stabilizes. But whenever you make a decision based on futures, you have to realize that there's a possibility that the situation can get worse and you may be further behind on your goals. So you have to be aware of the risks with this approach.

If you're dead set on moving to a house then I think your gut's right - just try to sell the condo and then buy the house. I'd definitely advise against dipping into your emergency savings or selling your stocks or other investments (you don't want to miss out on diversification). Personally, I'd avoid the loan option as well - imo borrowing money from family can be a double edged sword and you don't want to sour your relationships.

I know that the rental market is pretty bad but have you tried leasing your DT condo?
Deal Guru
Feb 9, 2009
11274 posts
9780 upvotes
Best to know what kind of condo you own first. While condos are slow in general compared to last year, if you have a nice unit it may still sell pretty fast.
Deal Addict
Feb 19, 2019
1193 posts
1661 upvotes
Stouffville ON
OP, your assessment of the market is spot on, thankfully you are in the very good financial position and this gives you options.
Another option I don't think you have mentioned is to keep DT condo for long term investment, you already have one condo rented and you know what it entails. Rentals market is soft but if you list low enough you will rent it out.
Full Time and Full Service Realtor
Deal Addict
Jan 1, 2017
1424 posts
1244 upvotes
Option 3 is to lower your price if you need the money for the downpayment to sell it faster. I wouldn’t borrow from family as that may cause issues down the road.
Deal Addict
Mar 2, 2017
1752 posts
3093 upvotes
Toronto/Markham
Before trying to time the market and take on financial advice here, your should make sure you rank your priorities. I skimmed the thread, but your spouse should be priority 1 so living with your parents shouldn't be a consideration as it would strain the relationship.

What's stopping you from starting a family in the condo? 9-12 months before kid is born, and kid won't require much in the way of space until a year old. You technically have the next 24 months available to you without having to do a transaction in what's arguably the worst time to sell condo/buy house combo.
Realtor, Investor, CPA
Member
Nov 12, 2019
345 posts
547 upvotes
No one knows what the future holds. The forums is relatively biased as there are large number of condo investor/realtors, so keep that in mind when you hear that condo prices will recover definitely recover, because there is no guarantee. Make your decision taking into account of the worst plausible outcome -- if you hold the downtown condo and also buy a house, if prices drops next year without a recovery of rent prices, would you be able to mentally handle that situation?

I think there are two preferable options:
- stay in your condo until it sells or just delay the purchase
- instead of trying to time the market, lower your selling price to sell the condo faster and move on with your life
Jr. Member
Dec 3, 2017
121 posts
80 upvotes
Rent both condos, refinance and take equity if you. Put it downpayment on new house. I think detached house prices will just continue going up more, so the more you wait the harder it will be to buy one.
Member
Jun 15, 2015
426 posts
459 upvotes
Thornhill, ON
OP, is your DT condo 1 or 2 bdrm? What is the list price?
Deal Addict
Jan 12, 2017
1338 posts
666 upvotes
Another option is to rent everything out, and rent, instead of buying a house in the suburbs where you think you'd like to live. You can get a better sense of where you really want to buy and also give the condo market some time to recover. Have not checked rents since COVID hit, but up until at least early this year, you could rent an entire house for the price of 1 bdrm downtown.

Condo's recovering within 5 years is a certainty, and SFD in the GTA have, without doubt, experienced 'surge' pricing this year due to COVID.

GL
Asuky11 wrote: Looking for some input on my situation.

Currently: Own two condos, one in North York, one in downtown Toronto.
- Living in the downtown unit.
- North York is currently rented out, with what seems like a happy stable tenant.

Goal: Looking to buy a small house and start a family - likely in the suburbs (Markham, Richmond Hill, Thornhill).

Currently, between my SO and I, we don't have enough liquid cash for the down payment for a house so we intended to sell our downtown condo since we were living in it anyways and upgrade to a house - using the capital/upside on the condo for the down payment. We decided this back in Sep, during the early signs of the depressed condo market, but it wasn't too clear at the time so we packed up and moved back to the parents since we didn't want to do showings while being in the unit with Covid and all. The unit has been sitting on the market for about 3, heading into 4 weeks now with only a handful of showings. I'd say we are priced ok in general, and competitively in our building so just goes to show how slow it is. Note that this condo was purchased 4-5 years ago, so as you can imagine it has appreciated.

We aren't looking to 'play' the market, want to make the best decision at this time and simply move to the next stage in life. For me, this is all just bad timing where we are selling into a depressed condo market and trying to buy into a crazy house market in the suburbs. We aren't leaving downtown because of Covid19 (I love downtown and honestly would stay there if it were all up to me :P). I think we would have done this move irrespective of the pandemic around this time.

So I've come up with a few options:

Path 1 - Still look for a house, if we see something we really like, we go for it - and use other methods to cover the down payment temporarily.
1.1) Use our HELOC on the condo, all savings, and sell my stocks/investments - I'm uncomfortable with this because we'd basically have no savings left AND I'd be dipping into the other parts of my portfolio which I never wanted to touch. I've kinda ruled this out.
1.2) Use the HELOC, and some cash (not touching emergency savings, stocks) and borrow money from a family member (which we'd need to return within 12 months) - which means the DT condo needs to sell within 1 year - I'm borrowing to buy us time

Note: Between us, we have a good income and could handle the house mortgage + the downtown mortgage (w/o rent) and be okay. I did the math and if the NY condo were vacant as well, we'd be in the red and need to dip into savings, but we'd still be okay for a bit - hence my suggestion in path 1.2 where we still have the savings buffer - assuming the worst case scenario of carrying 3 mortgages.

Path 2 - Play it safe. No looking for a house until the condo sells.
2.1) Leave the unit on the market and just wait for a buyer
2.2) Give up this whole process and move back to the condo and try again when market stabilizes - last resort since living with our parents, to be frank has been a bit depressing after being out for years - but we'll live if it is the best approach.

My gut tells me 2.1 is our path to go, but I've felt pressure from my SO to get back to our own space so I've trying to figure out what else we can do.

Any input and ideas would be much appreciated.
Member
Nov 1, 2020
365 posts
182 upvotes
Chickennbeans wrote: Another option is to rent everything out, and rent, instead of buying a house in the suburbs where you think you'd like to live. You can get a better sense of where you really want to buy and also give the condo market some time to recover. Have not checked rents since COVID hit, but up until at least early this year, you could rent an entire house for the price of 1 bdrm downtown.

Condo's recovering within 5 years is a certainty, and SFD in the GTA have, without doubt, experienced 'surge' pricing this year due to COVID.

GL
good angle. Condo's recovering within 5 years is a certainty, i dont disagree with that.

However freehold would have gone further by then, or very likely given the mega immigration plan over next few years and QE and near zero interest rate and slow down on construction/inventory and the needs for goverment to use real estate as the spontage to absorb the money they've printed and will print. That's the real risk in this option. Also perosnally i would feel weird to own two places but still renting my primiary place -- too much unnecessary admin work on both sides.. just my 2 cents.
Deal Addict
Jan 15, 2010
1193 posts
1396 upvotes
Toronto
What did you price the condo at (PSF)? What is the absolute lowest you are willing to sell it at?
Deal Addict
Jan 12, 2017
1338 posts
666 upvotes
I think freehold in core areas is going to skyrocket long term. Immigration will make sure of that (we do need to get to 2-3x our total pop as a country to be competitive globally). How the next 5 years will play out is a bit uncertain.

Using historical price growth in the GTA, it is clear that immigration impacts prices very unevenly with the GTA, with Markham and Brampton taking the prize on the extreme high end, and Durham suffering the most. The numbers this year seem to agree - price increases have been relatively distributed across detached in the GTA, with Durham increasing significantly quicker to 'catch up' to the GTA avg, and York increasing must slower, and significantly lagging the other areas (only just reaching 2017 peaks this month). It is possible and I expect, likely for immigration demographics to change post COVID, so the areas with continued buyer interest could shift. What is clear is that not all areas of the GTA will appreciate uniformly, or even at all. Affordability is certainly not increasing, and neither are wages. Increasing the gap between condos and houses will further impact demand from upgraders.

IMO, long term, the 'shiny, new and enormous house' factor that York Region has will fade and the GTA (Peel/Durham/York) will become more consistent in price which means drops where prices are much higher than avg, and increase where lower. Where OP is looking, they need to consider this carefully. Realistically, once building value depreciates and land value stabilizes, there is little justification for anything north of Steeles to be significantly higher than the rest of GTA. This is very prominent in Scarborough.
MikeMOON2 wrote: good angle. Condo's recovering within 5 years is a certainty, i dont disagree with that.

However freehold would have gone further by then, or very likely given the mega immigration plan over next few years and QE and near zero interest rate and slow down on construction/inventory and the needs for goverment to use real estate as the spontage to absorb the money they've printed and will print. That's the real risk in this option. Also perosnally i would feel weird to own two places but still renting my primiary place -- too much unnecessary admin work on both sides.. just my 2 cents.
Newbie
Aug 11, 2020
69 posts
29 upvotes
I would stay put, continue living in your condo and rent out the other, when the market goes up sell one to get capital for house down payment

the condo market will eventually go up again if you are in a good location

houses price are at high right now

no point selling a condo at low point while buying house at high
Deal Fanatic
User avatar
Oct 16, 2008
8184 posts
2822 upvotes
Maple
Sell 1 of 2 condos, make sense to sell DT one. Get the money from the sale to buy a house and keep renting out North York one (as you said good tenant there). Sometimes it's not good to have too many eggs in one basket.
Temp. Banned
Apr 29, 2010
569 posts
939 upvotes
GTA
Stretch out as much as possible and get the house while keeping your two condos.
Newbie
Sep 14, 2020
75 posts
67 upvotes
Sell the condo downtown at a price your content with and buy a house.

No need to delay your life and what makes you and your wife happy.

You are in good financial situation and delaying 2-3 years based on the hypothetical posts here makes no sense to me.

If you wait two years and condos do recover your detached house may also go up as much or more and your left with a few years that’s tough on your relationship and always waiting to take that next step.

Life is not just bout accumulating as much money and savings ( I know this is rfd) but it you pretend your 80 years old and try to minimize regrets and mistakes, my intuition is the best decision is to get the house you want and feel settled, and start your family.

You won’t regret that you could have made another 50-100k waiting 3 years, you may regret the tough years in the condo and that you waited for no reason.

Just my two cents as someone who has done deep reflection outside of just money
Last edited by techVcondo on Nov 3rd, 2020 3:06 pm, edited 1 time in total.
Member
Nov 1, 2020
365 posts
182 upvotes
techVcondo wrote: Sell the condo downtown at a price your content with and buy a house.

No need to delay your life and what makes you and your wife happy.

You are in good financial situation and delaying 2-3 years based on the hypothetical posts here makes no sense to me.

If you wait two years and condos do recover your detached house may also go up as much or more and your left with a few years that’s tough on your relationship and always waiting to take that next step.

Life is not just bout accumulating as much money and savings ( I know this is rfd) but it you pretend your 80 years old and try to regret mistakes, my intuition is the best decision is to get the house you want and feel settled, and start your family.

You won’t regret that you could have made another 50-100k waiting 3 years, you may regret the tough years in the condo and that you waited for no reason.

Just my two cents as someone who has done deep reflection outside of just money
best practical comment so far
Deal Fanatic
User avatar
Sep 14, 2006
8901 posts
1538 upvotes
There are so many variables and the biggest one is what the future holds. No one knows but like what others said, a logical plan would be to not sell your condo at the lower point of the trajectory and buy a detached at a higher point. You’re losing money there but then the question is would it continue for a longer period of time and if that is the case, you’ll end up paying even more down the road.

As an example, my friend waited 2 more years to buy while still renting and they ended up paying $300K more for a smaller house than what we got. Basically it’s a gamble.
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