Pros and cons of purchasing a new or resale condo
A recent Toronto Star article reports that more than 20,000 new condominium units were completed in Toronto in 2014, and that by the end of October, almost 19,000 new units were sold.
This jump in new builds is a result of a number of factors, including rising costs in the housing market, the draw of a “downtown” style of living, and efforts by condo builders and communities to attract potential buyers by building in areas of convenience, such as close to a subway line, and bringing amenities, like parks and schools, to condo-rich areas.
What does all this new construction mean for the market on resale units, and how is a buyer to decide what is right for them?
Generally, the question of buying a new or resale condo raises the same issues as a new or used home. The primary advantage when buying new in Ontario is Tarion, a program that offers a variety of protection to the purchasers of a new build, including warranties to a buyer for defects, protection for deposits, and even compensation for delays in closing or occupancy.
New builds are often “green," incorporating high-performance energy efficiency and using modern materials and designs to maximize energy, cost savings, comfort and air quality.
Some buyers may prefer to purchase a used property, to get a place in a specific area or neighbourhood. A resale property is on the market and generally available, so there is little wait time, unlike a new build which may require a buyer to purchase the unit and then wait years for completion.
There is also a trend in new builds to respond to the demand for “family” units, which increases not only the space, but also the cost, so buying a resale unit can offer significant cost savings.
New builds can also offer an increase in legal costs. The agreement to purchase a new build is a binding contract, and unlike the purchase of a resale property, many people will not use their own real estate broker to help them finalize the deal. As in any case, it is vital that important binding contracts are understood by those who sign them, and a purchaser of a new build strongly benefits from retaining independent legal counsel to review and explain the documents.
Whether purchasing a house, new condo, or resale condo, there are upsides and downsides. A home may mean more space, a yard, and a white picket fence, but it can also mean more maintenance, a longer commute, and a higher purchase price.
A new condo may offer the latest energy efficiency and Tarion warranty protection, but this comes at a higher purchase price. A long wait time for the completion of the build could also mean that when it is finally ready, the unit is no longer suitable for your circumstances. A resale build may be cheaper and available, but there is little protection for a buyer if there are problems with the unit after purchase. What is most important is that the purchaser weighs all their options, and picks the property that is right for them.