Looking to live within the downtown core, but seeking more space than most condos provide? In the hot Toronto real estate market, where the average detached house is priced over $1.2 million, townhouses are a more financially realistic housing upgrade for many buyers. They’re also often preferred over high-rise living because they can feel more like a traditional house; some townhouses may even have a small yard or deck, or private driveway.

But there are a few factors buyers should keep in mind when choosing a townhome over other housing types – here’s what they should consider when weighing their real estate options.

Less Supply and a Slightly Higher Price Point

If condos represent the greater end of the affordability scale, and houses the least, townhomes are somewhere in the middle. They’re still considerably pricier than the average condo unit, according to the Toronto Real Estate Board’s September Housing Market report; one in the 416 cost an average of $655,466, compared to $446,294 for a condo.

There’s also far fewer of them available: only 387 units were sold in September, compared to 1,787 condo units. If you’re planning on buying a townhouse, come armed with as high a down payment as you can muster, and be ready to engage in a bidding war or two.

The Difference Between Townhouse Types

Perhaps one of the largest points of confusion around townhouses is that they aren’t equal in terms of ownership. There are two types, and depending on your finances and lifestyle, one may be better suited for your needs than the other:

• Condo townhouse: These are run by a condo corporation and governed by a board, just like a condo high-rise. All amenities and exteriors are considered common areas (you own only the interior of your unit), are maintained by the condo corporation. Like a traditional condo, you’ll pay a fee every month for these services.
• Freehold townhouse: Also referred to as a rowhouse, these townhouses offer far greater ownership autonomy. You wholly own your unit, which is physically attached on either side to its neighbours. That means, like a detached house, you are responsible for maintenance and repairs – however, you’ll pay only your mortgage payments each month!

The Pros and Cons of Condo Townhouses

Pros: This is arguably the easiest option in terms of lifestyle – you’ll be off the hook for all outdoor maintenance such as gardening, lawncare, and snow removal. You’ll have the opportunity to represent your interests as part of the condo board, get to know your neighbours, and have peace of mind that all units in the complex adhere to consistent regulations. Condo townhouses also tend to be a more affordable option, as ongoing maintenance fees tend to have an inverse relationship to real estate prices.

Cons: Just as some buyers may enjoy the uniformity of condo regulation, others may find it stifling. For example, there are often rules as to how you can landscape your property, what you may keep on your balcony, and how you may decorate the exterior of your home. While this can be a blessing (your neighbour can’t paint their unit bright pink and fill their lawn with trash, for instance), it could also mean you aren’t allowed to decorate for the holidays, or keep a barbeque on your lot.

In addition to having to pay condo fees, you’re also at the mercy of how your board chooses to utilize its money – should there be a large damage incident such as fire or flood, you may be forced to pay a special assessment fee to help cover the charges.

The Pros and Cons of Freehold Townhouses

Pros: The greatest benefit of a freehold townhouse is you’re truly in control of your home. You can upgrade, decorate and maintain your unit as you see fit, and don’t need to contend with the politics of condo board life. Because freehold condos are in greater demand among buyers, you can expect to pay more – and see a greater return in your real estate investment when you sell. Your maintenance costs are potentially lower, as you decide when to do upgrades and repairs.

Cons: Be careful what you wish for – with a freehold townhouse, you’re truly on your own in terms of upkeep, physically and financially. Should your unit need a new roof or suffers a fire, there’s no condo reserve fund available to help offset your costs. And, just as you have total control over the look and feel of your unit, so do your neighbours, which can impact the desirability of your complex and resale value.

The takeaway: Prepare to pay more for complete autonomy – you’ll likely need to save a larger down payment for a freehold option than you would for a condo. It’s also a good idea to keep an emergency fund of your own, as would a detached house owner, should you need to shell out for emergency repairs. Regardless of which option is right for you, ensure you receive a pre-approval from your mortgage lender to determine what you can comfortably afford within your individual finances.

Writer: Penelope Graham 

Penelope Graham is the Managing Editor of Zoocasa.com, a leading real estate resource that uses full brokerage service and online tools to empower Canadians to buy or sell their home faster, easier, and more successfully.

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