There are numerous things to consider when trying to decide if you should buy a new home that is not yet built from a builder or whether to buy a resale home. There are pros and cons to each consideration, so you should do your research before coming to a decision you may later regret.
When looking for an existing home you may not find one that’s exactly to your liking or in your price range. You may come across homes that are in your budget but will require costly renovations and updates in order to suit your needs and lifestyle. If you have your eye on a specific neighbourhood, you may have no option other than to purchase a resale home.
On the other hand, when you buy from a custom home builder, the homes are typically in newer, less-developed neighbourhoods. The amenities that exist in well-established neighbourhoods, like schools, shopping districts and public transportation, are still being planned and built. But with a new build, you have the opportunity to design your own custom-built home or choose from a floor plan that meets your specific living requirements. Newer homes are often more energy-efficient due to the innovations and improvements in the sector over the years, such as more efficient windows, lighting, thermostats and low-flush toilets. New homes generally incur fewer maintenance costs over the first several years, and will come with specific warranties.
As for price, it’s hard to say which costs more due to the current state of the real estate market. Generally, when it comes to square-footage, resale homes may cost less and you will have more room for negotiation if there’s no bidding war. In Ontario, new builds require you to pay GST/HST on the price of the home, but you will receive 80 per cent of the HST back when you move into the home or rent it out. There is always risk in purchasing a home that is not yet built. You’ll have to pay your down payment and hope the project is completed on schedule and without any surprises. We have all read stories about people who have purchased condos in the past and suddenly found out the construction project was cancelled. Their down payment was tied up for several years before it was refunded.
Buying an existing home allows you to immediately build equity. As banks will not hold current interest rates on mortgages, buying resale versus newly built means you can have stability with your mortgage payment rather than rolling the dice on what the mortgage rate will be when your new home is finished construction.
When buying a new condominium, you’re often at the mercy of the building’s property management and board of directors who will make decisions regarding the property. There are always growing pains with brand new buildings. The rules now require the board of directors must reside in the building, so at the very least, you know that the people who have invested in the building actually live there and will generally care about the conditions and rules. However, if the board has yet to be established, the quality of its board members and how they will affect what happens in the building has yet to be determined.
With any home purchase, there is always a measure of risk. You can mitigate your risk with an existing property, by physically inspecting it, walking through it and actually seeing what you’re getting. When it comes to a new home you have to rely on concept designs and floor plans without knowing exactly how things will turn out.
Whatever you purchase will be determined by many factors, among them your personal preference. Some buyers in the Greater Toronto Area tend to prefer the character and charm that many existing homes exude, while others prefer to live in brand-new quarters with modern, clean designs. Make a list of what is important to you – price, location, aesthetic – and talk to a realtor for more guidance.