“The choice was simple for Amanda Brown and Anders Nielsen: Pay some of the highest rents in the nation, or sink that money into a mortgage instead. The couple chose the latter, buying a one-bedroom northwest condo for $230,000 and marking their first foray into Calgary’s housing market. Now they regret it.“
The following article was on the front page news of the Calgary Herald yesterday. First and foremost, I don’t personally know the couple and the basis of my post is not one to judge them. When I read the profile of the young couple, I couldn’t help but think that these were some the prototypical buyers in the market 1-2 years ago. Buyers who were not overly prepared (or researched enough) to buy a property but yet ended up doing so after being influenced by MSM and DDS propaganda. Buyers who thought only short term and not long term. It was sexy to own a property in the last year and watch prices go up. Many of the buyers were rushed into the market fearing that they would “be priced out of the market forever.” Fast forward one year and now this couple is faced with a $32,000 bill (half to be paid by the end of May 2008, the other half to be paid by May 2009) on top of their $230,000 mortgage for a 1 bedroom Edgemont condo. One is a student and the other is working full time in the oil patch. I wonder what their next steps will be? It’s really an unfortunate situation and I definitely feel for them. Not to be pessimistic, but what if prices decline further this year or mortgage rates increase (or even a combination of both)? Eventually, they will be upside down on their mortgage and still required to pay for the repair bill on the leaking roof. I sure hope everything works out in the end for the couple, but I’m sure finances will be extremely tight during the next couple of years.
Which draws me to my next point. One of the dangers in buying a condominium is that you own what is inside the walls of your unit, nothing more and nothing less. Now not all condominium projects are built to fall apart, but as a condo owner there is an inherent risk of having no control over repair fees. Generally, if the building requires repair, the tenants are the ones who are required to pay the bill – whether they want to or not.
Maybe sometimes, renting isn’t that bad after all?
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“Generally, if the building requires repair, the tenants are the ones who are required to pay the bill”
Well there’s a Freudian slip for you. Yes condo “owners” are really tenants. But unlike renters you have to put up a lot more money up front, take on a big debt, and submit yourself to big expenses beyond your control. It also costs you a lot to move too.
No way would I consider buying one unless the prices got really attractive, and that means under 100x rent.
It is literally impossible with prices the way they are today to afford a property on 1 single paycheque and be able to eat other things other than KD and water for dinner. I’m in my late 20s, and most of my friends who bought during the last two years were exactly like the couple described in the newspaper. Dual incomes are required to get into the real estate market for first time home buyers. Thats a scary thought.
how many $10,000 assesments have been charged to new owners in different complexes ? we have no way of knowing condos are the ultimate scam
damage is found ?
repair contract is given to a preferred contractor then money is kicked back to the board…your a captive victim
someone should follow this up and see if the condo board president pays his/her share
these condos make you pay and pay and pay….and your helpless
no thanks
The condos in Vancouver are a real joke! A lot of them have tarps permanently draped over them.
If you own a condo you own your fractional amount of the land and of common areas as well.
The condo association members represent the owners and control how repairs are done.
I will never buy a condo. Hamster cage debtor lifestyle is not for myself. Wife and me are waiting, thanks for setting up the blog.
I am the female student featured in the Herald article.
After reading the responses above, I have to say that I do agree with making sure you do your homework before buying. I would definetly go back and hire a company to review the past condo documents for us and would definetly try and find an honest realtor who would work with us along the way (but hey, it was my first step out into the market after living with my parents so I can’t blame myself too badly for being naive).
The Herald quoted us as saying “we regret our decision to buy” but I dont believe that is entirely true anymore. I think if you do you research and your condo propect comes out clean, then go for it. Even after all this soggy condo business, I would never ever rent. I still stick to my original idea of “why pay someone elses mortgage when I can throw my money at my own investment”.
Yes it comes with a risk but that is what you need to be willing to take. Unfortunetly our risk showed its face and these next few years may be harder than we hoped but in the end we will still come out with something solid and concrete to show for it.
And hey, our alternative option if we cant afford to live here is to move out and rent it to someone who can pay our mortgage for us. I am just happy to have the option to be on the receiving end of the rent table.
Amanda, sorry to hear of your situation. Just sold a Calgary condo and our building was consistently facing repair. Nothing dramatic, just expensive. New roof, boilers, that sort of thing. Lived the condo life for 10 years and faced assessments in both buildings over the years. They suck. I hope things work out for you.
Glad to see Amanda, who is on the record as being in a bad condo situation, come out to defend condo ownership. I don’t see owning a condo as any more risky than owning a house. The choice still comes down to choosing a lifestyle, which is how it should be.
Condo fees and special assessments are not a waste of money. House owners rarely keep careful track of the money they put into their homes or try to calculate the value of their own labour that they put in, making house vs. condo ownership hard to compare. In fact, the argument could be made that because of economies of scale, condo owners are saving money by buying gas, electricity, insurance, and yes even building repairs at bulk prices along with their neighbours.
As BearClaw said, you also have a good deal of control through your condo association. It is not hard to get yourself elected as president of the condo board if you so desire.
Now, as for the rent vs buy discussion, that’s a totally different matter.
Hi Amanda,
I really feel for your situation as I re-read the first part of the Herald article today when I came across this post. I felt bad for you and the other owners of that complex back when the article first came out too. It is a very tough situation.
I am a Realtor who does mostly condo work in the inner city. I have come across some really bad condo situations (saplings growing on a tar-and-gravel roof, condo boards ignoring engineer’s recommendations, condo boards ignoring Condo Property Act requirements and so on). But I feel that, if done right, a condo purchase is less risk than a home purchase – but if done wrong, it can have greater risk.
Here is my number 1, top piece of advice for condo buyers:
Although this doesn’t guarantee a problem-free condo experience, by far the most important thing to do when buying a condo is have a qualified person go over all the condo docs with you, before you buy. This can be your Realtor (if they are qualified), but even better is to use a third party condo document review service such as condo-check.com. That way you get two opinions, your Realtor’s (assuming they know condos and are therefore qualified to go over the docs with you) and another professional too. Absolutely NEVER buy a condo without a condo document review in advance. If there are going to be problems down the road, the warning signs are almost always there in the condo docs.
You mentioned how if you did it differently you would have gotten an honest Realtor to work with – that is very, very sound advice for everyone. I know the real estate agent profession does not have the best repution for ethics with the public, but a lot of work has gone on in recent years to change that, and you should be able to expect more of your Realtor regarding ethics. Before you even look at a single home, before you have even chosen a Realtor, have a long conversation with them about their role, duties and ethics.
If you are a buyer, ask them:
- Have they ever been fined by an industry organization such as RECA or CREB?
- What fiduciary duties do Realtors owe their clients? Does a buyer’s agent owe any duties to the sellers, the other Realtor, or other members of the public?
- Do they practice dual agency (to be known as “transaction brokerage” after Oct 1, 2008)? If a dual agency situation comes up, how do the Realtor’s fiduciary duties change? What implications does that have for us, the buyer clients?
- Under what circumstances would they feel dual agency is not appropriate?
- If you are a first time buyer, try this question on them, “We are first time buyers, if a dual agency situation arose would you recommend we consent to dual agency?” (the answer should be in my opinion, “in most cases, no, because first-time buyers should always have full representation”)
- What protections would they recommend be incorporated as conditions into an offer to purchase a condo? (The answer should be condo doc inspection and home inspection of the unit)
I hope this info helps ensure everyone’s condo buying experience is a step up in quality of life.
- Andrew Kyle
http://www.andrewkyle.com
I am a Condo owner as well in Calgary. I moved from a larger home (newer) to a townhouse. I am a single mom and find that I feel more secure and not as much too worry about maintenance wise. I do get to garden and cut my own lawn in my fenced in backyard which is nice as it feels more like your own home. I agree with the person above saying that you don’t know what hidden fees you have as well with a single family dwelling. I have up to the point of the condo always owned single family homes. Now more to the point here I just got hit with a “SPecial Assessment on Friday. We are all to dish out money for new siding. My portion is over $2,100.00 It is to be paid now or by April 1st which is just over 45 days notice!! That to me seems very unfair especially in the economy for 2009. I will have to rob peter to pay paul as the saying goes. Anyways this is really all that has been required of the homeowner so far and I have lived in my Condo for 6 years now. This is definatly a lifestyle and most should know this going in that there might be this type of situation that might arise. Still smilin in NE Calgary!!
:)