A condo is economical and saves on space; just look at how many homes can be built on a small plot of land compared to houses. Condos are often cheaper than a house in cities and its surrounding area and with many people moving into cities, this has created a considerable demand for new homes. Home-buyers, retiring baby boomers, and people emigrating are the most common apartment buyers.

The downtown area may see another four Calgary condominiums towers built if planning permission is given, at the moment the city is considering these applications according to the Calgary Herald. “It says to me people are pretty optimistic about the future, any of these plans are probably a two-year build, everyone’s looking two, three years out,” so said David Watson, the city’s general manager of planning, development, and assessment.

Today, economic indicators are quite positive about the condo market coming back into balance after a interval of prevailing supply over demand. The president of the Calgary Real Estate Board, is also very optimistic after sales of condos bounced back in June; believing the fall in amount of condos on offer and the demand for them balances each other well.

On an opposite note, some analysts are predicting a less than positive future, stating that there is too many apartment units and not enough demand. But on a more happier note, new analyses say that with the limited supply of land available for condo builds, the demographics and people emigrating to Canada combined, will mean that the boom seen should avoid collapse.

Phil Soper of Royal LePage has looked at the city planners’ estimates for demand against projects underway and firmly believes that there are not enough apartment projects in the big cities.

However, there are concerns about interest rates. A prediction of a cumulative 25 per cent fall in the national average price in the next 3 years, will be seen when income and population are considered, according to David Madani from Capital Economics. “There’s a really large disconnect between house prices and the fundamentals. We don’t think that this is sustainable,” Mr Madani said.

Twenty-eight million Canadian dollars is what an international buyer paid out for a 9,038 square foot residence on the 55th floor in the middle of Toronto that hasn’t even been finished yet, as reported by BuzzBuzzHome.com

For an average buyer to afford even a square foot of this condo, you would have to quit eating, buying clothes and paying bills such as rent/mortgage. For each square foot, it would cost upwards of $3,000 and would take approximately 753 years to finally own the apartment.

This condo is a chunk of the Four Seasons Hotel and Private Residences development work at the northeast corner of Bay Street and Yorkville Avenue. The Four Seasons seems to have an expertise for selling the most costly condominiums in the world. In 2008 and 2009, from the same complex, they sold a condo in Seattle at the cost of $11.3 million to a buyer, which in 2009 made them the seller of the most expensive condo.

A $12 million condo, also sold in Seattle, did not go on the MLS, I wonder why? In fact, new condo building works were selling in L.A. from anywhere between $4 million to $14 million as recently as 2006.

When talking about these massive prices for luxury homes, it is rare for them to be listed through the MLS. One of the main reasons for this, is that real estate developers of this type of complex look to lure buyers extremely early in their plans. The reason for this, is that developers do not want to be left with empty condominiums once the buildings are finished, therefore they try to sell as many as practical before they even start building.

London, Moscow, Tokyo, and Shanghai are without doubt the cities to be if you want to look for a condo with an outrageous price ticket, though New York certainly is the first place to look. If you can’t afford the price of a condo and have about half a million dollars to spare each year, then you could rent a condo on the 35th floor of 15 Central Park West. At $40,000 per month, it is an outlay a lot of us can’t comprehend. Forget renting, at those prices you might as well look at purchasing the apartment, that is if you have the money. There is probably not a more well-to-do landlord than Leroy Schecter, who owns these condos and he tried to sell them last year at a mammoth $55m.

There are many variations of this justification. But the general argument goes like this: “We live on a small island, our population is growing, and there just aren’t enough houses to go around.”

Last year’s property price rebound helped confirm this assumption. With an aging and growing population only so many properties can be built.

The bulls have got it right in one sense. House prices are indeed all about supply and demand. However, it is demand and supply of mortgages, not actual properties.

If you want the evidence, just look at Spanish housing market…

Spain is facing worst recession. It’s a country facing bankruptcy. 20% of population is out of work. And there are myriad horror stories of Britons who bought property in the country only to find that their homes were subject to legal disputes, or simply that their pensions couldn’t sustain them when the pound slumped against the euro.

UK housing market has so far survived the recession. In 2nd quarter of 2010, the sales went up by 25% in Spanish market. 50% of sales were “second home” sales.

That may sound satisfactory. House sales are still way below their peak figures. Yet, the toll on house prices hasn’t reflected this.

It is estimated that there are a million empty new-build homes in Spain. Says the MoneyWeek, “most property experts say it could take another three to four years to absorb surplus stock.” That is because of builders not building new houses.

So what is causing Spanish market to stay stable? British ex-pats had no choice but to sell their properties at discount.

The British Government has been totally useless in recovering Briton who lost their money in Spanish property scam. Many lost money on new built properties never to see their money again. The temptation of buying properties in a sunny environment lead them to some major losses. Some unfortunately could never recover from this fraud.

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“Many households have been benefiting (from the low interest rates) when it comes to mortgage payments, but that will begin to turn over the next few years,” mentioned Lai Wah Co, the CBI’s head of economic evaluation. The reasoning behind the rate rise prediction would be that the Financial institution of England really wants to fight inflation, that has risen worryingly recently.

The organisation predicts that the Customer Costs Index, the Government’s preferred measure of inflation, will reach three.eight percent within the 1st three months of next year which it’ll be nicely over the Bank’s two percent target two years from now. It presently stands at three.three percent.

The CBI expects interest rates to climb using their file low level of just 0.5 percent within the 2nd quarter next year.

It forecasts rates will rise 0.25 percentage points each quarter prior to the tempo doubles in the middle of 2012 to 0.5 stage will increase, taking the bank rate to two.75 percent by that year’s finish. A 2.25 per cent increase in home loan rates would begin to see the monthly repayments on a common £150,000 home loan increase from £909 to £1096.

Although this is only one report, the truth that the CBI has chosen to create the prediction at the moment indicates that it may have some data from the Financial institution of England, which the Financial institution prefers to not release directly.

So anybody planning to remove a fixed rate home loan deal within the expectation better rates need to compare these potential rates, and the consequent predicted cost of their home loan, with what they’d spend on a floating rate, to work out possible gains or losses.

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This includes quite obvious things such as ensuring that the area is crime and drug free and ideally where other families live. You can check statistics for the area on websites like upmystreet.com. Also you may want to check if the area is in neighbourhood watch scheme if so that is good news because it means all house owners are looking out for each other.

Ensure that you pick a property in quite street. Children will not be safe in a busy street that is full of cars. Children have a right to a peaceful property. Fully isolated property will result in lower fuel bills. Energy efficiency can also save you money on your fuels bills. As well as energy efficient home, you need to ensure that you will have double glazing windows that will keep the heat into the property and cold weather stays out.

Is your property far from local schools? This is a critical decision point because you will need to ensure that property is not miles away from the local school. You need to be in a walking distance of your property just in case your car breaks down.

Find out who your neighbours will be? Are they business men? Usually you will find that people such as builders and plumbers are most difficult to get on with. Always working and trying to make ends meet. These people are always on the go as they try to get rich quick yet they will fail miserably on each occasion. Regrettably this will be reflected in their attitude towards you, as their suffering neighbour.

Ideally your neighbours should be Doctors. They are well respected professionals who geniunely care about people around them. Stay as far away from taxi drivers as you possibly can. They are constantly working and will end up dumping their cars on your drive. If you do not fancy daily confrontation with your neighbour, make sure that you stay away from taxi ghettos.

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The real estate market in Canada is now slowly recovering from the last year’s shock, as it follows from the report. While new home market actual starts slowed down from January to June 2009 by over 43 per-cent compared to the same period in 2008, the MLS sales increased by over 17 per-cent in confrontation to the July 2008 results.

New housing price index increase seems to follow the overall trend on the real estate market. The average price in Canada has varied from -0.6% to -0.1% between January and May. The new housing price in Toronto has changed only slightly over zero numbers, in accordance with the recovery of the resale market.

Economic conditions: Unemployment

There are some good news regarding the economy. First, the unemployment growth appears to have got under control. In July, the number of net losses was 13,000, while during the first quarter of 2009, the fall reached 273,000. Second, the Bank of Canada has found out that there is finally some positive results of the various stimulus packages employed in many countries.

Affordability to rent

When we want to calculate the affordability to rent, we need to find out how many hours in a month people need to work in order to earn the average price of a 2-bedroom apartment rent or the average mortgage payment down to 30% of gross monthly wages. (The Canadian hourly wages average grew by over 5% and reached $23.69 in 2008 (Ontario: $24.65, Toronto: $24.93)).

Generally, the average number of working hours needed to earn the average rent for a 2-bedroom apartment down to 30% has declined from 114 to 113 hours per month. The number of hours for Toronto declined from 149 to 146 and brought this city the second “most expensive” position right after Vancouver, while the biggest decrease was observed in St John’s, Brantford or Guelph.

Affordability of home owner-ship

While the number of hours necessary to rent didn’t decrease so distinctly, the same number for average mortgage payments down to 30% of gross income was more noticeable – between 2007 and 2008 it declined from 255 to 240 hours. Toronto was one of the places that experienced one of the most significant declines in hours necessary to own: from 299 to 286. But yet Toronto remains 4th among the most expensive places to own after Vancouver, Victoria and Abbotsford.

Conclusion

As a result of the current situation when the housing market is still cooling from the second half of 2008, the new housing is now somewhat more affordable, which is news I really like to bring to my clients, being a real estate agent in Toronto. In the first six months of 2009, the prices were slightly decreasing and the affordability of renting and also home ownership was becoming more favorable. With ongoing low interest rate, this period of time remains a great time to purchase a property, before the market will take second breath.

Hari wants a apartment.

Hari left his parents and leased an apartment. He is a professional who is always on the go. Hari has a mix of friends, some who rent apartments, some who have partners and some who own houses. Suddenly, Hari’s bachelor pad feels a little cramped and sterile (as his mother always points out). He used to be cool with it, but now he’d like to spread his wings a little bit – get a bit more room to invite friends, and have the option of really decorating and getting some better furniture. Hari is looking for somewhere that is more pivotal for his needs as he works drawn out hours and doesn’t want to be driving miles just to go to the shops. Hari’s pursuits do not need a lot of room, so room is not something that he needs. He also doesn’t like the idea of the upkeep and money necessary to maintain masses of room. Closet space and a big flat wall for a TV is Hari’s requests. He enjoys clean lines and new accessories. He doesn’t have temperament to shovel snow or the desire to grow roses. He wants a apartment that has all inclusive services so if something goes wrong its fixed and at no extra charge. Hari fine to keep to himself so he doesn’t need lots of neighbours dropping round. He accepts that noise now and again is part of life. High security with constant 24/7 security guards is a must. A pool and gym would be an added godsend especially if they are covered in the cost as Hari likes to keep fit. It will also save on gym fees. Access to a parking space will assist with the resale price even if Hari does not buy a car. This is probably not going to be his last move, so resale is imperative. The future has not happened yet, so who knows how the situation will change. Condo life is the obvious conclusion for a person at this stage in their lives.

Susie wants a house.

Susie is not able to imagine living without having some personal space. When she was in college, she had enough of communal living and now she doesn’t miss having only thin walls between her and her neighbours at all. Susie just wants to have her privacy and enough space, and she doesn’t mind having to spend some more time for travelling to work. Also shopping has to be done weekly, but it is no problem for her to take her SUV to the supermarket and load it up. Nothing means more to Susie than her two children, and she wants them to be able to play around the yard like she did when she was a kid. Susie and her family also live in a neighbourhood where they know the other families nearby which is really useful, since there is always someone at hand to give advice about the best babysitters, school sports or the new off-leash park. And also it’s possible that Susie and her husband Stuart may have one more child in the future (although they haven’t really planned it yet), or possibly Stuart’s mother might need some help later and would move in with them. Therefore they for sure need enough room for the family to expand. Stuart likes to work on his vintage car in the garage and their daughter Jenny is already into playing the drums, which she wouldn’t be able to do in a flat – it gets loud enough in the basement as it is, so Susie’s planning to have it soundproofed and build in a bathroom to make a perfect teen retreat. On weekends, Susie loves to tool around in her garden, which is really her pride and joy – there’s nothing like picking fresh vegetables for a salad while Stuart fires up the grill. For Susie and Stuart, it’s also very important that they are owners of the land they live on. If it happens that the roof begins to leak, as last year after the storms, it’s still their own roof and they have money aside for such cases. Any house just needs some occasional reparations, that goes without doubts. For Susie and Stuart, the responsibility for all the upkeeping work is not a problem. They have divided the work up and they each have their own chores – Susie cuts the grass, while Stuart takes out the recycling. As far as security is concerned, Susie believes that their new system will keep the burglars out of their home. And also there is a residents’ association that keeps an eye on what’s going on in the neighbourhood. She is just satisfied in their secure neighbourhood and wants to stay there long-time and put down roots.

Final advice

So now which one of our two examples felt closer to you – Hari or Susie? Some people may feel neither of our examples is close to their own situation – these may be the ones who would enjoy living in a condo town house, which has many advantages of both condos and homes.

If you decided that a apartment could be a better fit, never let the monthly apartment fees, combined with property taxes, mortgage and insurance, exceed 30% of your monthly income. Find our whether building damages are covered in your fees or whether you have to make extra or one off payments. The Homeowners Association (HOA) or a real estate lawyer can proof read into your contract for you. What is made available in your fees? If there are extra amenities included do you really need them? Look on the internet or ask around to find out an approximated cost for any additional bills you will have to pay such as gas and electric. Also check the contract to find out if the building is pet friendly. You may not have a pet now, but you may want one in the years ahead. If your condo has many of windows there could be significant heat loss so your expenses could rocket if heating is not included.

If you decide to go for a house, our recommendation is that you shouldn’t pay more than 25 per cent of your monthly income for the mortgage plus the property taxes. In any way, you will have to pay all for all the upkeeping needed at the house. First try to estimate the necessary upkeeping costs and also to what extent you are able to manage the repairs needed, as all the responsibility (from a leaky faucet to a flooded basement) will be just upon you. Think about the financial and physical cost of transportation, which is likely to grow if you will be moving to a suburb. Make sure that you examine a recent home inspection to prevent any surprise problems with the home’s mechanical systems, from wreaking havoc with your budget. For example, a fixer-upper with an ancient furnace, old wiring and insufficient insulation will demand a more or less immediate cash infusion just to make the house liveable.