Pre-construction versus resale condos

The condo market has expanded and evolved significantly across Canada over the last two decades. Approximately 1.9 million Canadians now call a condo home and one third of all new homes built in Canada’s major cities are condos. With the average prices of homes in the GTA soaring to about $1 million, this makes condominiums, which represent a relatively affordable home ownership option for first-time buyers, an attractive option. But with so many new and resale condos on the market, and new buildings breaking ground every day, where is the best place to invest your downpayment?

PRE-CONSTRUCTION CONDOS

Buying a new condo in Ontario has a number ofadvantages. First off is the fact it takes three to five years on average for your condominium to be ready for occupancy and then as much as one to two years for it to actually close. An advantage? Hmmmm…yes! Why? Because over time, you can save more of a deposit. Based on the past history of the value of your unit, its value should rise, allowing you to possibly have an easier time getting a mortgage, or at the worst, having an asset worth more on the closing than you paid for it.

Another advantage to a new development is choice. Buyers are able to select their view, floorplans and customize fixtures and finishes. On the flip side, with choice comes an element of surprise. While some developers are getting creative with 3D renderings and virtual reality, it may be difficult for buyers to purchase a unit from the developer’s site plans.

Ontario’s Condominium Act also allows a buyer to terminate a purchase agreement of a pre-construction condo within 10 days of receipt of all documentation. During what’s called a “10-day cooling-off period”, a purchaser of a pre-construction suite strongly benefits from retaining a lawyer to review their agreement. Getting a real estate lawyer that you trust early in the process can save you time and money in the long term. Your lawyer will be able to negotiate your contract, handle your occupancy closing and register the property in your name once the building is complete­.

RESALE CONDOS

Buying a resale condo allows buyers to get a home that’s move-in ready. You can see and interface with the neighbourhood. You can see how the building integrates into the area and how it feels. You can touch and feel the finishes and you know exactly what you are getting. You can review the status certificate and look at the condo fees and know how accurate they are and whether they will go up in the near future. Resale condos provide a sense of certainty as to cost and expense.Resale condos also only have one closing, as opposed to a pre-construction suite which has both an occupancy and final closing. This saves you time and money on the purchase of your unit.

SO WHERE SHOULD YOU INVEST?

In the end it comes down to your personal needs on a multitude of levels. We recommend you take your time before you start and do the research and make the decision that works best for you.

Related reading

Must-haves versus nice-to-haves when condo shopping

Surprising soft costs of new-built condos