Non-Condo Home Ownership in Toronto

August 2021

Owning a single-family detached home has been romanticized.  An overview of single-family home ownership makes one appreciate the appeal of owning a condominium.

Some claim that paying rent is throwing money away when they could be “owning” a home.  Others claim home ownership is cheaper than renting.  Neither claim is correct and both are justified by faulty math.

The romanticized ideal single-family detached home includes a backyard and is near a subway station.  It can cost more than $1.5 million most of which is financed by a loan.  Purchasers primarily pay interest on that loan and may never be able to repay what is owed.  Any increase in mortgage rates, as expected in the coming years, worsens a difficult financial situation.  Any job loss, injury, illness or other reduction in income makes it impossible to fulfill financial obligations if additional funds are not being set aside.

For many there are no funds for furnishings, repairs, vacations, eating out or entertainment after paying the monthly mortgage and utilities.  There is less money for Christmas gifts and celebrations.  More money is needed to repair the furnace, landscape, repair water pipes, fix the chimney, install home security, pest control, repair the washing machine and replace the roof.  Countless unexpected expenses materialize each year.

If unhappy with the current pandemic lockdowns, imagine them continuing for decades and one begins to understand the impact of paying too much for a home. The hope for most is that price appreciation makes all this spending worthwhile.  For most this never happens except when downsizing or moving to a less expensive region.

High-rise condo living offers an appealing ownership alternative.  That monthly condo fee is less than the cost of electricity, maintenance, repairs, renovations and everything else associated with owning a detached house.  That backyard is replaced with shared outdoor space, indoor amenities and less financial stress.  It is easier to find money for eating out, travelling and whatever else gives you pleasure while enjoying a more luxurious lifestyle.

Earlier generations spent less on housing.  More rented and had no aspirations of being homeowners.  They managed to enjoy life, save money for their future and retirement years, and be less dependent on government largesse.  These financial skills have been lost to recent generations more willing to bid up the cost of an unaffordable property, accumulate a massive debt, and more in the way of expenses to maintain.  They call this an investment.  Bitcoin and space travel seem less risky.