Although this year saw a dip in the real estate market, a mere glance at the skyline will tell you how popular new condo developments in Toronto are, and that the market doesn’t show any signs of slowing down in the future. With high rise buildings gaining popularity, people usually ask whether buying a unit on the top floor is beneficial while looking for downtown condos for sale. We are here to solve this problem for you.
Are Higher Floors a Better Investment?
Since purchasing a new condo in Toronto can be expensive, it is always wise to take a practical approach while searching for investment options. Specifically, while looking at a unit on a higher floor, you must remember that it’s a common practice for the builders to charge an extra sum, known as floor premium. This is because added security and better views are considered as amenities.
You might want to consider the following two essential aspects:
- The increased cost for higher a unit may hold its value only if you are planning to live in it yourself. If you are thinking to purchase it as an investment, it may seem superficial.
- In addition to this, you must also ask yourself whether you will get more return on your investment for purchasing a condo unit on the top floor.
There is no right or wrong answer to whether buying on a higher floor is beneficial because identical units with the same conditions on every level do not exist, making it difficult to compare the return on investment across different condos.
Should You Purchase a Unit on Top Floor?
Several studies that have been conducted with this perspective prove that although condo price increases as you go higher up in a building, the difference is smaller in degree than you may realize. A unit on the top floor does not necessarily guarantee a high resale price.
An in-depth analysis shows that the price changes between floors come to around -6% to +3.5% which indicates that you can expect an increase of about +0.35% in resale. While considering investing in a pre-construction condo, if the builder’s floor premium is more than 0.35% of the sale price, you may want to reconsider purchasing it. If it is, however, less than that, you can go ahead with the purchase.
For instance, if the condo you want to buy is priced at $500,000, the floor premium should not be more than $1,750.
You should pay the premium for a unit on the top floor while buying a high rise condo only if you feel that the premium amount is worth it and you are sure of recovering it when selling the unit in the future.
Experience the Luxurious Living at New Toronto Condos by The Davies
If you are looking for condos for sale in downtown Toronto, be sure to take a look at the condos by The Davies. Living in our units means a life of comfort with all the luxuries and facilities.
For more information on our condos, or to book an appointment to meet with our sales team, you may reach out to us by calling 647-360-9588. You may also register online, and browse our floor plans to discover which would best suit your requirements.