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New Homes Vs. Resale Homes

New vs Resale

Should I buy new construction or a resale home currently on the market? This is an age-old debate as there are pros and cons to both options. There is no right or wrong answer, the choice is for you to make depending on what is important to you. Hopefully this can shed some light and help you determine which direction you should go.

Location: New home sites are generally in the suburban areas that are still developing or even under developed. Area might lack amenities, shopping centres, transit accessibility, compared to existing resale home neighbourhoods for at least the foreseeable future. Not to mention if you’re planning to move in when the house is ready, don’t expect to have a clean car for a while as you’ll still be living in a construction site until the entire neighbourhood is completed (see Preconstruction closings explained). Maturity in the neighbourhood, trees, families, schools and community centres, trails and parks would be found in resale homes compared to new home sites. New home sites are usually in suburban areas which could mean a longer commute for you. Every day. Both ways. Daily.

Cost: There are different things to consider when it comes to cost. Resale homes the added cost would be upcoming renovations that are required to keep the house “up-to-date”. Whether it be a new roof in the next few years, windows or furnace, they all have an expected lifetime and when the time comes, be ready to pull out the wallet or risk further damage if neglected. New homes give you a blank, fresh start on a home and that means you don’t really need to consider updating the above mentioned items for at least 10-15 years. Hence, the premium you pay for a new house. However, you need to consider the costs of putting up a new fence, getting new appliances, paving the driveway, installing a garage door opener, get all new window coverings for every window, etc. All these things add up real quick if you plan on moving in at closing. Hidden costs in a New home that you may or may not expect are builder/government levies. These are costs that the government charges the builder (in which they pass the cost onto the consumer) in expectation of an increase in residents. These levies can be for road maintenance (increased traffic/road wear and tear), school levies (influx of new students/classrooms, etc) and utilities (sewage, hydro, etc). These costs can be billed at closing on top of your closing costs, but before you sign the contract, you can “cap” these levies so they don’t get out of hand. Ask me how. These costs can add up to thousands of dollars so be cautious and know how you can protect yourself.

Renovation: The beauty with buying new is that you can choose the colour schemes, finishes and fixtures without having to demolish anything. Buying new, you are buying a floor plan, you get to choose the layout that you like based on your needs and wants. You can also tell the builder what you want done (in terms of finishes) so you don’t have to lift a finger or have your own contractor in there. Depending on how big of a renovation you want to do, the disadvantage is that you’re renovating based on a floor plan on paper. Resale homes, as mentioned above, you may have to do maintenance renovation jobs that may or may not be foreseen. Having said that, you can buy a resale home that has all the renovations done and is move-in ready. Buying a new home/condo is covered by Ontario’s Tarion Warranty for a few years. Just move in, and enjoy!

Personalization: Some of my clients really want new builds because they want something that has “never been lived in”, whether it’s superstitious or just having something brand new, that can be a big enough reason for them to go that option. If you’re indifferent about that, buying new allows you a fresh canvas to design and personalize this space without having to correct or adjust from a previous owner’s touch. On the flip side, some resale homes have great personality and character that is already done. If you’re not a big designer or would like to avoid all the hassle of designing, resale is an easy way out but that doesn’t mean you can’t personalize a resale home. To each their own.

Layout: Layouts are interesting because in resale homes the styles of homes and layouts have changed over the years. Traditional homes have separate rooms, formal living room and dining rooms, rooms are generally larger and more spacious, larger lots, unique curb appeal and some would argue, better materials/workmanship. New homes are contemporary, modern, open concept, higher ceilings, more functional, but are on smaller lots, “cookie-cutter”, and some say “they don’t build them like they used to”. But new homes have new design, technology, and current construction standards.

Price: Buying new/preconstruction units/homes used to be very appealing and an affordable option 15-20 years ago when urban sprawl was happening. You need to understand that intensification is happening, GTA is growing and immigration is continuing. Builders, are not stupid. They know the demand is there, so what they are doing now is selling their preconstruction units/houses at FUTURE prices. (Future meaning the time of possession.) So if they are selling units/houses at a site that is expected to be completed in 1, 2 or 3 years time, they will project the price inflation in that time period and price it arbitrarily (prices are generally higher than current market prices). Resale homes, you pay current market prices.

Value: Resale homes have been selling/sold and similar homes in the neighbourhood have been selling/sold. This gives you a better idea of how much the value is at that time. Because you can track the sales in past years, you can get a better idea of how much value has grown and how much appreciation is, year after year. New homes, you’re guessing what the appreciation will be, and if the community development will fetch you a reasonable return on your investment.

So in an ideal world a revitalization of an area would ideal. Buying a new home in a convenient location. Or a new custom home in a mature neighbourhood. Hope I didn’t confuse you more or give you a harder decision to make.

Any questions?  I would be happy to answer them!

 

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