New and Pre-construction townhouses in Toronto & GTA

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Types of Townhouses

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Types of Townhouses, GTA Townhouse Sales Data

What are freehold townhomes and condo townhomes? Is the price difference between condo townhomes and freehold townhomes reasonable?

Freehold townhomes are individual, independent houses (detached homes) put together. They share walls-the same wall is used to support two houses-which is the reason these townhomes are cheaper to build than detached homes. You own the inside of the townhome and the land below your townhomes, and are free to do anything you want in this land. Freehold townhomes have no monthly fees-you and your neighbours are independent house owners for all practical purposes.

Condo townhomes are pretty much the same as low-rise condos (less than 4 storeys). You own the inside of the townhome, but the land, driveway, gardens etc. are jointly owned by all the condo townhome owners. These are the "common elements" and amenities; each owner contributes a monthly fees towards their maintenance. Owners elect a board of directors to make decisions about the common elements and amenities-e.g. landscaping and gardening, remodeling, snow shoveling, garbage removal etc. There are monthly condo townhouse maintenance fees of about $0.15-$0.25 per sq ft. per month depending on the common elements and amenities in the community. Condo townhomes have lower fees than high-rise condos, because of lower amenities (typical high-rise condo maintenance fees are $0.40-$0.60 per sq. ft. per month).

Example: With a typical condo townhome maintenance fee of $0.20 per sq. ft per month, an 800 sq. ft. condo townhome has a monthly fee payment of $160. For a 1,000 sq ft condo townhome, the monthly payment is $200. The number of condo townhomes being constructed in GTA outnumbers the number of freehold townhomes by 3:1 (for every one freehold townhome being constructed, there are about three condo townhomes being constructed) because the monthly maintenance fees are relatively small for condo townhomes in comparison to the extra money you would pay to own a freehold townhome, and people like the fact that they don't have to worry about basic things like landscaping and gardening, remodeling, snow shoveling, garbage removal etc when they buy a condo townhouse.

Condo townhouse or freehold townhouse, which one should I buy?

A freehold townhouse is about 30% more expensive than a condo townhouse (in the same area and for the same floor space). If in an area of GTA a condo townhouse is $350,000, a similar freehold townhouse would be $450,000. Because condo townhouse fees are reasonable, we recommend most people to buy condo townhouses instead of freehold townhouses-the extra $100,000 which you pay for owning a freehold townhouse today can be used to pay the maintenance fees of a condo townhouse for the next 20 years!

A small number of freehold townhouse developments nowadays do have condo fees-you own the individual unit and the land below it, but share in the common element maintenance. The maintenance fees in such developments are even lower than condo townhouses of similar sizes.

Used or pre-construction townhouse?

If you want to own a townhome immediately (within the next 3 months), used townhouses are the way to go; but if you can wait 3 months, you have some excellent options in pre-construction townhomes. Townhouse developments are really fast to build, and once the builder starts construction, the whole project is typically finished in a few months. Delays in deadlines are rare for construction of townhouse developments (unlike condos, where delays are common). All pre-construction townhouse purchases are covered by the Tarion Warranty in case the builder has financing problems or goes bankrupt-you will never lose your deposit money.

The bottom line is: You end up paying almost nothing extra to buy a pre-construction townhome-the price difference between a new or pre-construction and used townhome is very low (at the same location and the same size), i.e. similar sized pre-construction and used townhomes in a particular area cost about the same. We therefore recommend you purchase a pre-construction townhouse instead of a used townhouse.

What are stacked townhomes?

Stacked townhomes, as the name implies, are condo townhouses sitting on top of one another. A stacked townhouse building with multiple units is very similar to a low rise condo building, except for one thing: there is no corridor or hallway to traverse to get into or out of any unit. For all other things, they are like a regular condo.

You can think of condo townhouses of two types: stand-alone condo townhouse, and stacked condo townhouse.

Stacked condo townhouses are cheaper to build then stand-alone condo townhouses, because you have units above units-and you can think of them as something in between a stand-alone condo townhouse and a regular condo.

Stacked townhouses are the cheapest form of townhouse development; and are our No. 1 recommendation for GTA housing buyers. They give you the privacy and the low maintenance cost of a condo townhouse-but because the units are on top of each other, they are cheaper than a stand-alone condo townhouse.

Quiz: Are there stacked freehold townhouses?
Answer: No, there can't be stacked freehold townhouses, because you cannot have units on top of each other in a freehold townhouse development-the upper units will not have their own land, a necessary condition for all freehold townhouses!

Sales Price Data for used townhomes
Median Price of a Condo Townhouse in GTA in December 2016: $491,000
Median Price of a Freehold Townhouse in GTA in December 2016: $612,000

Data from TREB Report for December 2016. See full report here (Page 11 and Page 17)



Pre-Construction Townhouses/Townhomes in Toronto and GTA


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