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j_spot...it's not only whether or not the property value will go up or down, it's the costs associated with buying that may make it not worthwhile to buy for such a short term. I'd say that renting might be your best option.
People need to look at all factors...is this meant mostly as a smart, short term investment or are is it mainly someone looking for a place to live, in a location they like, while not losing money?
Housing outside the city will continue to appreciate...so will housing inside the city. Condos are riskier because there will be a glut of units on the market soon and value will plateau, or possibly even go down a bit.
1. Property taxes are calculated from the ASSESSED value of the property by MPAC (Municipal Property Assessment Corp) in Ontario, not it's actual market value. The vast majority (I'd say 99.5%) of properties in the GTA (or pretty much anywhere, for that matter) are significantly underassessed, most even for 2004, vs. the property's actual value on the open market. So taxes are NOT 1.5% of market value...not even close.
2. Penalites vary on mortgages...usually they're either 3 months interest or interest rate differential (ie. the rate you got when your mortgage began for vs. today's rates). People breaking mortgages now, who were in higher interest terms from a few years ago, are getting raped on IRD penalties. But IRD won't really mean squat with rates going up instead of down, so figure on your penalty probably being 3 months interest if you break the term.
In any case, you can select a 2 year term instead of the more common 5 year term and thereby avoid a penalty altogether. 2 year rates are substantially lower than 5 year rates anyway...
Or, if you know you'll be there 2 years or less, consider an open variable rate that's below Prime. The Prime rate is tied into the rate set by Bank of Canada based on a variety of economic factors, not bond yields like fixed mortgage rates...fixed rates have been consistently going up this spring while the Prime rate actually went down last month. There's still talk it will drop once more before going up.
3. Vaughan vs. Toronto...um...that's all fine to say "buy in Vaughan"...but a lot of people don't want to live in the burbs. Yes, you're money will go further out there...but it's also "out there" and he's going to UofT. Rent somewhere closeby...you'll LOVE not having to commute!!!!
4. Not all condos are built like shit  Just like houses, some are built better than others and buyers should know what to look for in building materials. Find out the condo fees, subtract what you'd be paying for utilities anyway in a house, and see if they are really that high. Quite often they are reasonable.
For only two years...I'd say rent and save yourself a lot of hassle. You'll have no up front fees and no worries when you go to leave (like what if something needs to be repaired during those two years). Keep in mind the additional fees with buying...realtor commission at point of purchase and again when you sell, legal fees both times, mortgage interest if you're not buying it outright, land transfer tax if you're not a first time homebuyer, etc. Those fees, prorated over the life of owning a home are minimal...but in a two year span that's A LOT of money that may not be recovered by the home value increasing.
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