There are a number of condo owners who are struggling to pay their bills.
Many people bought a condo because they were convinced that real estate is an investment that will always go up in value. They wanted “in” before the prices went up even higher.
Condo living is expensive living. After they scraped together the down payment, their legal bills and their other moving costs, some purchasers are barely making it.
Paying the first mortgage, the second mortgage, the monthly maintenance fees, the utilities, unit insurance, taxes, their cellphone plan, daily coffees at Starbucks and the car lease payments can be a struggle.
Some people bought a resale unit in an older building. These units are priced cheaper than newer ones. However, unexpected fee increases or Special Assessments, due to major repairs, can quickly wreak a household budget.
There are older condos where the monthly maintenance expenses go up far higher than the rate of inflation. In one older condo, every year the monthly fees increase by almost $100 a month.
What can the owners do when the wolf shows up at the door?
They may cut back on their expenses. McCafe replaces Starbucks and pizza joints replaces sit-down restaurants. They use the hot water kettle at work and bring their own tea.
They may cancel their unit insurance. (Not a good idea.) They get a second job even if it is a part-time one.
When it gets tough
They may return the leased car and rent out their parking spot. Every little bit helps.
They may rent the second bedroom or rent the den as a “private space”. There are condo apartments where four people live in a one-bedroom plus den.
A few owners, just a few, rent their unit on Airbnb and when the unit was being occupied, they sleep in their car in the underground parking garage, or in their locker. It’s not as bad as it sounds: they shower and shave in the morning using the swimming pool facilities.
When things get too bad, they are forced to sell.
The Covid-19 pandemic
How is the Covid-19 pandemic affect condo ownership? A lot depends on how many people lose their jobs, how long we continue to have shutdowns, how many businesses close, how soon the tourists return and when the short-term rental business picks up.
It also depends on when the government turns off the subsidies to businesses.