Written by: Holly Stringer 

 

Buying a home is a huge, but very rewarding, investment into your future. Amongst the major decisions you need to make when buying a home, such as the location and price range, is the type of home you are looking to purchase. There are different types of homes, as well as different types of ownership, that are available to you. Knowing the advantages and disadvantages of each type will help you determine which option is best for you at this stage in your life. Narrowing down your options will make your home-buying experience targeted, which saves you time and makes the process much more enjoyable and stress-free.  

 

Detached

Without a doubt, detached homes are highly sought after and are often sound investments (depending on location, of course). They often come with a larger piece of land than the other types of housing, and offer much more privacy from your neighbours. Having your own front and back yard is a definite advantage. The most common types of detached homes include 2-storeys, bungalows, and side- or back-splits.

 

In today’s market, the 2-storey family home is the most common. The benefit of a 2-storey house is that it offers more square footage without taking up as much of the lot as the other types of detached homes. In contrast, a bungalow (which is only one level) will only offer the square footage of the main floor. The basement, however, in a bungalow is almost always the same size as the main floor, offering a great deal of extra family space (when finished). In addition, a bungalow is a great option for seniors who may have difficulty navigating all of the stairs found in the other types of detached houses.

 

A side-split or back-split home consists of several half levels (usually about 4). The staircases are much smaller than what you would find in a 2-storey home, for example, but there are usually more of them. The benefit of a back- or side-split home is that it often has two or more family rooms and an open layout, making it feel larger than it really is.

 

Investors Perspective

From an investment standpoint, detached homes carry the most advantages. Because the ownership of land is the primary driver for investment, purchasing a detached home offers investors a larger parcel of land and less limits on what you can do with that land (or the house itself). For example, there is no limit on what you can do in terms of renovation because you own the home and property (assuming you get the appropriate permits). In addition, you always have the option of tearing down the home and rebuilding. Furthermore, if the location is chosen wisely, you can cooperate with your neighbours to sell several lots to a builder which will greatly increase the value of your individual lot. A detached home also brings with it the opportunity to lease out a portion of the home, such as the basement, for additional income. The primary disadvantages to investing in a detached home are cost related; they are more expensive to purchase and tend to be more costly to maintain.

 

Semi-detached

The primary advantage of purchasing a semi-detached home is that it often costs less than a detached home. According to the Toronto Real Estate Board, the average price for a semi-detached home in Toronto last year was approximately 25% less than the average price for a detached home. In addition, because you share a wall (the common wall) with your neighbour, the cost to heat a semi-detached home is often less than a detached home.

 

Semi-detached homes will usually have lots that are larger than what you would normally find in a townhome; however, the lots tend to be smaller than what you would get when purchasing a detached home. Sharing a common wall with your neighbour could also mean that there is noise transfer. Some common walls do not extend into the attic, meaning that you will likely hear more from your neighbours home and it could pose a risk if there is a fire in the neighbouring house. Because you are so close to your neighbour in a semi-detached home, it is recommended that you find out something about who is living next door prior to purchasing.

 

Investors Perspective

As previously mentioned, semi-detached homes are more affordable than their detached counterparts, which can be appealing to investors. The problem lies in the fact that their resale value is less than detached homes; therefore, semi-detached homes appreciate at a slower rate. Like detached homes, one of the main advantages of investing in a semi-detached house is that they can be renovated; however, you are unable to destroy the home and rebuild unless you cooperate with or own the neighbouring house as well.

 

Condominium

The term condo is usually used synonymously with apartment; however, this is incorrect. The term “condominium” does not refer to the type of home, but rather refers to the type of ownership. In this type of ownership, you are not only purchasing the unit itself, but a share in the common areas as well (e.g. lobby, underground parking, pool, halls, playground, etc). Because you are a part-owner of the common areas, you are also responsible for the upkeep and repair that is required to maintain these areas. Hence, you must pay a monthly maintenance fee (which varies depending on the amenities offered, age of the complex, etc).

 

There are many advantages to owning a condo apartment. They are usually situated in high-traffic areas with easy access to public transit and shopping. In addition, you do not have to worry about lawn and pool maintenance, snow removal, or roof and window replacement. Finally, condominium complexes often offer many amenities that you may want to have if you owned a house, such as a gym, indoor pool, hot tub, sauna, theater room, billiards, virtual golf, etc.

 

Disadvantages can include closeness to neighbours (all around you), a lack of private outdoor space (front or back yard), rules and restrictions you must follow (e.g. pet restrictions), and most often a lot less storage and living space than other housing types.

 

Investors Perspective

There are several benefits associated with investing in a Condominium Apartment. Firstly, apartments are low maintenance, as there is no land. In addition, Condo Apartments are great for renting out if you aren’t planning on living in them yourself. If purchased in a good location, condo apartments should be relatively easy to lease. In order to get the greatest appreciation on your condo apartment, it is best to purchase it pre-construction. According to Urbanation, which tracks the condo market in Toronto, this year could be one of the best years to date in terms of condo sales, stating that “both sales and prices for new units climbed in the third quarter of the year” (Urbanation.ca).

 

Townhomes

Like semi-detached homes, the primary advantage of purchasing a townhome is in the price tag. Townhomes are often a great deal more affordable than their detached counterparts. There are two main types of townhouses you can purchase: freehold and condominium.

 

Owning a freehold townhome is similar to owning a detached or semi-detached home. You own the house itself, as well as the lot, and you are responsible for maintaining both. Although this means more time and energy to do lawn work and snow removal yourself, you do not need to pay a monthly maintenance fee, which can sometimes be quite hefty.

 

In contrast, owning a condominium townhouse is more like owning a condo apartment in that you own both the unit, as well as a portion of the common areas (e.g. parking lot, park, etc.). The benefit is that oftentimes the exterior of your home is covered by the condo corporation. So if you need a new roof or new windows, it may be replaced by the corporation. Every condominium corporation is different in what they cover, so be sure you check it out prior to purchase. As with condo apartments, you will be required to pay a monthly maintenance fee which varies in amount. A good real estate agent or lawyer will obtain all of this information for you.

 

A townhome is much like a step between an apartment and a detached home. You still have to deal with the closeness of neighbours, however, you have the advantage of having a yard. Albeit most townhomes offer lots that are quite small and narrow, it is much better than having no yard at all.

 

Investors Perspective

Although it will likely cost more to purchase a condo townhome than a condo apartment, it is definitely the better investment of the two. A condo townhouse will appreciate at a faster rate than a condo apartment and will therefore have a better resale value. A freehold townhouse is an even better investment as they are more often sought out by buyers and they have usually have no (or very low) maintenance fees, giving you more control over your monthly expenses. In addition, the resale value is better for a freehold townhome than a condo townhome.

 

Amongst the many housing options, choosing the best really comes down to knowing your own needs and what you can afford. Oftentimes, you may start out in one housing type because it is more convenient or affordable and then end up in several others throughout your life. Knowing the basic differences between them can assist you in your home search and give you an idea of which type will best satisfy your needs at this particular point in your life.

 

 References

• Urbaniation  http://www.urbanation.ca/news/65-toronto-condo-market-sees-one-its-best-years-agency-says

 

 

 

 

 

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