A recent article in the Globe & Mail concluded that retirees who downsize from a house to a condominium will often not see a huge reduction in their monthly living expenses for property taxes, insurance, utilities and maintenance and repairs. To assist readers, the Globe & Mail has developed an interactive worksheet which will calculate the monthly living costs of living in a house in comparison to those of a condo.
There are several reasons why the costs of living in a condo may not be cheaper than living in a house, even though an owner’s living quarters may be considerably smaller:
• A condominium owner gets services, such as a concierge and a professional property manager to take care of the property. In a house the home owner has to take care of everything.
• A condominium may provide amenities that a house owner would not have, such as, for example, a swimming pool, hot tub and fitness centre.
• An individual house owner can spend as little as he/she decides on house repairs and maintenance. In addition to having the option to actually carry out the repairs and maintenance himself, the house owner has the freedom to postpone repair and maintenance work for as long as possible and to carry out any work at the cheapest price available. In a well-run condominium the common elements are regularly maintained and kept in good repair by professional tradespersons and owners pay for this as part of the common expenses.
• Condo owners contribute on a monthly basis to the condominium reserve fund for future major repairs and replacements. Individual house owners do not need to create or contribute to such a fund.
Even though the monthly costs of condo living may not be significantly less expensive than living in a house, there are still many benefits of downsizing to a condo:
1. Frequently the purchase price of a condo unit is less than the selling price of a house, which allows the owner to pocket the difference or to reduce or eliminate a mortgage.
2. Condo living offers a more carefree life, as the property manager is responsible for the day-to-day management of the property.
3. Many condominiums offer “resort-style” lifestyles with numerous amenities and activities on-site that owners can enjoy without having to leave the property.
4. Many individuals living alone and those who take frequent vacations like the security of having a concierge at the property entrance.
5. By moving into a newer condo building, many will be trading their dated house décor for a stylish environment decorated by a professional designer, without having to undergo the expense and aggravation of major renovations.
6. In many cases, smaller living quarters may mean that there is no room for adult children to move back in with their parents!!!!!! Whether or not this is perceived as a benefit, will depend on the dynamics of each individual family.
As the decision to downsize to a condo is based on more than just a straight financial calculation, many retirees will still opt to downsize to a condo.