Loading...Choosing between resale properties and pre-construction homes, much like deciding between a finished dish and a recipe. A resale home is like a dish that’s ready to enjoy—it’s tangible, complete, and you can immediately feel its flavours and charm. A pre-construction home, however, is similar to a recipe: it represents the potential for something wonderful, but it requires time and vision to bring it to life.
Each option has its advantages and disadvantages. The best choice depends on several factors. To simplify your decision-making process, we’ve put together a breakdown of the key points to consider.
New Build vs Resale Properties: Key Differences
1. Timing and Availability
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- Resale: The instant availability of an established property is one of the main benefits. After the deal has been closed, you can move in immediately or, if you’d like, start renting out your home.
- Pre-Construction: Depending on the project schedule, pre-construction properties sometimes have a waiting period of a few years. For buyers who are looking to make a long-term investment or who are not in a rush, this can work nicely.
2. Cost and Pricing Factors
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- Resale: The price of a resale home usually reflects the current market and often allows for negotiation. However, extra costs for renovations or updates are often expected, which can raise the total price.
- Pre-Construction: Often priced more than pre-owned properties in the same area, pre-construction homes allow phased payments, making them attractive for those looking to stagger their investment. But be cautious: there could be extra charges for upgrades, closing costs, or condo fees if you’re buying a new build.
3. Condition and Customization
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- Resale: The condition of previously occupied homes varies widely. While some resale properties are ready for occupancy, others might need to be upgraded or renovated. The positive aspect is that you are able to inspect the property, explore the neighbourhood, and understand exactly what you’re getting.
- Pre-Construction: With pre-construction, you get a lot of customization options, like choosing finishes and layouts, and sometimes even floor plans. However, the downside is that you’re purchasing based on plans and model units, which may not always match the final result.
4. Financing and Payment Options
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- Resale: Standard mortgage options apply, and buyers typically pay 5-20% down and finance the rest upon closing.
- Pre-Construction: Payments are often staggered, with deposits made in stages for the new development projects. While this can make it easier to save up over time, the final mortgage typically kicks in once the property is complete, and financing can be more complex if market rates change in the interim.
Investment Potential: Resale vs. New Construction
Resale Properties: Established neighbourhoods, especially in urban areas, offer trackable price trends, giving buyers a clearer idea of long-term value. Resale homes also generate rental income faster, ideal for buyers looking for quick returns.
Pre-Construction Properties: Pre-construction can appreciate significantly, especially in developing neighbourhoods or booming cities. The risk, however, lies in potential delays and market changes that might impact the property’s value by completion. In Ontario, areas like Toronto, Mississauga, and Ottawa have seen solid demand in new-developments, driven by urban growth and increasing demand for new units.
Best Scenarios for Buying a Pre-Owned House
- Immediate Housing Needs
- If you need a place to live soon or want a property that’s ready to rent out immediately, an existing house is the way to go.
- Low-Risk Buyers
- Those who prefer predictability in their investment may feel more comfortable with resale, as you’re buying a property with an established market value and tangible results.
- Looking for Character or Established Neighbourhoods
- Older homes often have unique charm and character and they are usually in long-standing neighbourhoods with big trees, parks, and local spots that newer areas might not have.
Best Scenarios for Buying a Pre-Construction Property
- Long-Term Investment Goals
- If you’re planning to stay long-term, pre-construction can offer a good appreciation rate as the neighbourhood and infrastructure develop.
- Future-Focused Buyers
- Ideal for buyers who want a fresh design, modern layout and features. Many newly built units in Ontario come with the latest amenities, energy-efficient designs, and smart home technology.
- Flexibility on Move-In Dates
- If you don’t need to move in right away, pre-construction can be a good choice. With phased payments and a later move-in date, buyers get extra time to plan and manage finances.
Risks to Watch Out For
- Resale Risks: Potential hidden maintenance issues and repair needs can be costly, so it’s best to invest in a detailed home inspection.
- Pre-Construction Risks: Be prepared for possible delays or added costs like developer fees, and work with a reputable developer to mitigate these risks. Understanding the contract terms is crucial.
Both pre-owned and newly developed properties come with their own distinct advantages for anyone looking to buy a home in Ontario. Your choice depends on how quickly you want to move in, your budget, and your comfort with potential risks. If you’re looking for a home you can step into right away, resale may be the best route. But if you have a flexible timeline and want a custom, modern space with growth potential, pre-construction could be your ideal choice. Take a close look at your needs and long-term goals to make a choice that fits your future plans.