Buying a Micro Condo: Is It Worth It?
Talk to anyone about real estate nowadays and the first thing they’ll say is “houses are way too expensive” or “it’s impossible to buy a house for a first-time owner”. One of the biggest group in the market right now is millennials and they’re gaining purchasing power. Real estate developers are therefore, offering a variety of options to capture the interest of “experience-loving” millennials.
Micro-condos are one of the most interesting options in this list. A micro-condo is a condo unit in the size range of 200-400 sq. ft. They’re very popular in places like Singapore where there’s a scarcity of land. But for a vast country like Canada, let’s look at its pros and cons.
The Bright Side
1. Location: If your small and cosy condo is located in the busy downtown, minutes from work, close to your favourite restaurants and hangouts, then you’ll love and be thankful for every inch of that 400 sq. ft.
2. Affordability: In today’s market, this is the biggest pro of a micro-condo. Low gross selling price allows them to be within buying reach of the average person. For millennials that is attractive because a low down payment and smaller mortgage means more flexibility with their finances and less feeling of being tied down.
3. Low Maintenance: As condo monthly maintenance costs are dependent on unit sizes, owning a micro-condo means lower maintenance fees. Smaller space also means lower utilities bills, lower furnishing costs and lower property taxes!
The Down Side
1. Size: Like two sides of a coin, a smaller condo means a smaller space. Living comfortably in a small space requires some adjustment in living habits and planned furnishing for good functionality- think furniture with storage and bed frames stored in the wall. It can be great but it might not be for everybody.
2. Financing: As micro-condos are not yet mainstream, securing financing for a unit could prove difficult. Most banks have a minimum space feet requirement for a loan as they do not want to take on the risk for these units, fearing that they could be tough to resell later on. Prospective micro-condo buyers should do their due diligence with their financing options before proceeding with any purchase.
3. Future Proof: As in they aren’t! These units might be great for a couple living it up in the busy downtown, but when that couple plans to have a baby, the small space will not be conducive for a family. That could mean selling and moving. A little bit of thought in future home planning is required before investing in these micro-condos.
The Final Verdict?
If you are single and do not want to pay rent or have a long commute to work, these can be a good option for you. Home sizes are getting smaller with increasing population and constrained spaces, in any case. With cities like Hong Kong and Singapore producing mostly micro-condos, no doubt the trend will catch on in bigger cities like Toronto soon enough as well. You just have to see if they are the right fit for you.
At Toronto Condo Only, we are passionate about new land developments and since 2007, we have helped clients get the best deals and the properties. Monty Malhi has and continues to build formidable relationships with reputable developers and major industry players to give clients first access to the most desirable and sought after projects in and around the GTA. First access to securing units at most projects can amount to considerable price savings of over $20,000 – $50,000. Clients trust our industry knowledge of the real estate investment market throughout Greater Toronto, which is the foundation of our success to buy low and sell high. With our broad vision and innate ability to understand real estate properties, including pre-construction low-rise and high-rise condos, resale homes and commercial properties, we have achieved continued success for our clients and ourselves.