What Are Considered Reasonable Condo Fees in Toronto?
Condo fees reflect the rising cost of living we've seen over the past couple of years.
I'll always be a condo guy. As someone who will openly admit that he is not a handy person (at all), owning a house actually scares me. Last week one of the hinges on our kitchen cabinet broke and an immediate wave of panic came over me about how I was going to get it fixed. I literally stared at it for 10 minutes trying to imagine how I could fix it myself without actually making things worse. Because I know if I tried to do it myself, I would indeed make it worse. Then I thought about all the things I don't have to worry about by living in a condo and began to appreciate those condo fees I pay each month to have someone else deal with everything else that happens outside of my actual unit. I still wish I was more handy - but I am who I am :)
I've lived in a condo for exactly 12 years now. Not the same condo, or the same building, but after living in and owning several condos in different buildings in Toronto, and seeing the way different condo boards manage their budgets, and sitting on the board of two condo corps as I'm writing this, I think it's safe to say that I'm pretty well versed in condo corporation financials. For those of you who have purchased a condo in the past, you'll likely remember the "status certificate" review process where your lawyer reviewed documents pertaining to the condo corporation looking for any "red flags" that may require your attention. One of the (many) documents in that package would have been the condo's current and previous year's budget. This is one of my favourite documents to go through because, as a numbers guy, I love to see how people spend their money. And trust me when I say, not all condo boards are created equal! Some loooooove to spend a ton of money to make their buildings look pretty while others focus on efficiency to keep fees low. It's all about the priorities of the board and trust me when I say that board meetings, specifically when it comes to the budget, can get heated. If you live in a condo now and you're wondering why you don't have a full-time concierge, or a full-time live-in super, or five cleaners working in the building every day, it's because there's only so much money to go around. It's a closed-loop system - what owners pay in condo fees is all the money there is to spend (plus maybe a little extra if you're lucky to have a guest suite or party room income, etc). So the only way to get extra services is to raise condo fees. Owners want it all - low condo fees, five-star service, and an impeccably maintained building. But financially, it's just not possible.
With inflation going bonkers for the past couple of years, those rising costs are directly affecting condo corporations' budgets. Think about it - if that plumber you always use would have cost you $110/hr back in 2019, they're probably closer to $150/hr now. That contractor who renovated your bathroom back in 2019? He's probably charging 25% more today (at least). The electrician. The cleaner. The painter. Everyone is charging more and material costs have all gone way up. And your condo fees are made of up just such people - plumbers, electricians, painters, cleaners, contractors. So to maintain and run a building at the same standard today simply costs more. Oh, and have you noticed the cost of natural gas? If you want heat in your building, you better believe that gas budgets have been blown out of the water this year because of the soaring cost of natural gas, among other things.
I wrote a blog post back in 2019 where I detailed what condo fees actually pay for. I always cringe when I hear people say "I'd never live in a condo because I don't want to waste money on condo fees". You pay "condo fees" whether you own a condo or a house, one way or another...If you own a house, you know what I'm talking about. But I digress. Back in my 2019 blog I also went over what I consider to be reasonable condo fees based on the cost per square foot. But with the way prices in the world have changed since then, I thought it was appropriate to update that info.
Engineers have also gotten very worried about the rising cost of materials and labour and have really pushed up condo reserve fund contribution requirements so that condos aren't caught with inadequate funds for major repairs down the road. Reserve fund contributions are probably the biggest chunk of what your condo fees pay for. Now that I think about it, go and read my blog post from 2019 because it will give you a better primer about the major categories of where your condo fees go. Go on, I'll wait.
Ok, now that you're back, I'm going to go over what I wrote back in 2019 about the different ranges of condo fees as calculated per square foot, followed by my 2023 updated opinion given the way things stand today:
In 2019: Under $0.55/sq ft - very inexpensive and realistically, it's pretty difficult to run a building with fees this low (although not impossible).
In 2023: My stance hasn't changed on this, and there's only a handful of buildings in Toronto that would even fall into this category having condo fees this low. It's usually because of some chunk of money that fell into the condo corporation's lap, likely from a successful lawsuit or a settlement with the developer, a neighbouring project, etc.
In 2019: Between $0.55 and $0.65/sq ft - Very good. In this range, you should be thrilled about your condo fees and as long as the building is running smoothly and is financially in good shape, you're in the sweet spot!
In 2023: I would say it's getting harder to harder to find buildings with condo fees this low nowadays, and if you do, they are likely to rise in the near future to cover the usual operating expenses. So my stance here hasn't changed either - if you're in this range, you've got very good condo fees so enjoy them while you have them!
In 2019: Between $0.65 and $0.75/ sq ft - Average. This is typically where I'd say most buildings lie, and generally allows a building to be run comfortably.
In 2023: Here's where things start to change. I'd consider condo fees in this range to now be considered "below average", whereas in 2019 they'd be considered just average.
In 2019: Between $0.75 and $0.80/sq ft - Above average. No need to be alarmed but this is probably on the high-end of average for condo fees. As buildings age, you see the fees start to creep up to this level.
In 2023: This is now what I'd consider the "average" range of condo fees for Toronto. I used to see condos with $0.80/sq ft condo fees and think they were kinda high. Not anymore.
In 2019: Above $0.80/sq ft - High. This is the point where condo fees start to affect the value of units in a building (apart from luxury buildings, which are a totally different category), as the monthly fees become a bigger factor in how much someone might be willing to pay for a unit.
In 2023: I no longer balk at condos that have $0.80-$0.85/sq ft condo fees. What I used to consider high is now more along the lines of "slightly above average but still reasonable". I think the threshold for what I'd consider to be "high" condo fees has pushed up to around $0.90/sq ft in 2023, versus a threshold of $0.80/sq ft back in 2019.
One final important factor that I mentioned back in 2019 is whether or not utilities (hydro/water, etc) are included in the condo fees for each unit. All newer buildings meter utilities separately (or at the very least hydro), but buildings built pre-2004 or so still might include hydro/water in their condo fees. My own analysis back in 2019 says hydro comprises about $0.08 to $0.09/sq ft of a unit's condo fees when hydro is included, and I'd say that approximation more or less still holds true today. Water is less dependent on the condo unit's size but should cost around $30-$40/mo, depending on your usage. So remember to make the necessary adjustments based what utilities are included to ensure you have a more apples-to-apples comparison.
And don't forget - if you own a parking spot and/or a locker, your condo fees will include a fixed monthly amount for those as well. It's very building specific, but I'd say the monthly condo fee associated with owning a parking spot in a condo downtown is usually around $50-$75/mo, and a locker is around $15-$20/mo. So if you're looking at a unit with parking and/or locker and comparing the condo fees to my categories above, remember to back out the fixed amount for parking and/or locker first so your numbers aren't skewed. Most agents don't do this. And it's a mistake.
So there you have it - an updated look at how condo fees in Toronto have shifted over the past few years as inflation and the cost of...well, everything, has gone up.
Have you checked out my previous blog posts?
Your Toronto condo lover,
iPro Realty Ltd, Brokerage
Direct: 647-223-1679 (call/text)