How do you choose between space and location when buying a new condo?

In today’s new condo market, it all comes does to two things; space and location. Before you make any other decisions, this is a tough one that you need to tackle, especially if you’re a first-time buyer. So, how do you choose between space and location when buying a new condo?

Some people place a lot of value on price per square foot, but it’s really only one factor out of a hundred that will help you make a purchasing decision. The way Toronto’s condo market works right now, the further from the core you are, the more space you will get for your money.

For example, there are a few new boutique condos being developed near Danforth and Woodbine, including Canvas Condominium by Marlin Spring and On The Danforth by Diam Developments. Currently in the preconstruction phase (On The Danforth is starting construction very soon), the units in these condos are priced in the mid $500s per square foot. That means you can get around 650 square feet for around $360,000 (very rough estimates).

A unit that size in downtown Toronto could cost you $100,000 more, depending on the area and building type. But, there are reasons why it is costing you more per square foot. Here are a few questions to ask yourself so you can narrow down your preferred location.

1) Why am I buying a new condo?

If you’re a first-time buyer, then this condo is your starter home. You’re probably planning to live there for at least five years. Think about your current living conditions. If you find yourself needing way more space, maybe a condo on the outskirts of the core are better options. If you’re comfortable in your 500 square feet, then perhaps a larger unit isn’t necessary.

Perhaps you’re thinking of starting a family in a condo. If that’s the case, then you probably need at least a two-bedroom unit, which will cost you a pretty penny downtown. If you’re a young working professional not really thinking about kids and you need to be closer to the Financial District, sacrificing space may be the answer.

2) Can I afford to drive?

If you’re living far away, off a transit line, you’re going to need a car and you’re also going to need to pay for a parking space, which can cost around $35,000 if buying preconstruction. If you’re buying on a transit line, you’ll need to factor in transit fare in your monthly budget, as well as travel time.

That said, just because you live outside of the core doesn’t mean you need to travel every day, especially if you don’t work downtown. There are a lot of areas in Toronto that are very walkable outside of the core, like the Junction, Greektown, or The Beach.

3) How often do I really work at home?

If you have a profession that allows you to work from home all of the time (or even some of the time), a den is a valuable space to have. A lot of condos have lounges and work areas, but these are common areas for residents. You can’t store working materials like computers, files, and a printer there.

A den can easily add 50 to 60 square feet of space to your floor plan. Can you afford it downtown? According to the Building Industry and Land Development Association (BILD), the average price per square foot hit a record high in the GTA in September, reaching $601. Urbanation says that the downtown core’s average price per square foot is closer to $660 (as of the end of the second quarter of 2016). $660 times 60 square feet is $39,600. Can you afford it?

If you work from home, that means you don’t have to commute very often, so it might be a better idea to buy a new condo outside of the core so that the den doesn’t cost you tens of thousands of dollars.

4) What’s the best investment?

Finally, a question that doesn’t lead to more questions (depending on who you ask). Areas of Toronto outside of the core have a lot of growing to do, that’s the reason why it costs less per square foot. If you purchase in the early stages of preconstruction, odds are the value will increase before construction even begins.

Same goes for downtown Toronto. People think that downtown is dense, but relatively, the core has a lot of room to grow and it’s going to happen. We’re building taller and low-rise buildings are being converted to boutique condos. Look at Hong Kong and New York City. Toronto is decades (maybe even centuries) from becoming as dense, and look at property values in those two areas. According to CNBC, the average apartment price in Manhattan at the end of last year was nearly $2 million.   

There is no right answer when trying to decide between space and location when buying a new condo. It all depends on what you value most. If you want more living space, then that settles it. If you prefer to be in the heart of the action and can live in a smaller space, then that’s okay, too.