Investing in a condominium is a great option for many Canadians who want to own a property without the maintenance and upkeep that comes with owning a house. However, when it comes to buying a condo, there are two main options: pre-construction and resale. In this blog post, we will explore the differences between these two options and provide you with the information you need to make an informed decision.
What is a Pre-Construction Condo?
A pre-construction condo is a property that has not yet been built. Buyers are essentially investing in a property that has yet to be constructed, based on floor plans and other specifications provided by the developer. The timeline for completion can vary, but it typically takes a few years for a pre-construction condo to be completed. Click here for Cosideration points to buy pre-construction condo
Advantages of Pre-Construction Condos
- Customization Options: Buyers have the opportunity to customize their unit to fit their preferences and lifestyle. This can include finishes, layouts, and even room configurations.
- Lower Maintenance Costs: Because the building and unit are brand new, there is less need for maintenance and repairs in the early years of ownership.
- Warranty Coverage: Pre-construction condos come with warranties from the developer, which can provide added protection and peace of mind for the buyer.
Disadvantages of Pre-Construction Condos
- Uncertainty: With a pre-construction condo, there is always some level of uncertainty around the final product. Buyers must rely on floor plans, virtual tours, and other marketing materials to get a sense of what their unit will look like.
- Delays: Construction delays are not uncommon in the real estate industry, and they can be frustrating for buyers who are eager to move into their new property.
- Financing Challenges: Financing a pre-construction condo can be more challenging than financing a resale unit, as buyers typically need to secure a mortgage before construction is completed.
What is a Resale Condo?
A resale condo is a property that has already been built and is available for purchase from a previous owner. Buyers can view the unit in person, making it easier to get a sense of the layout and finishes before making a purchase.
Advantages of Resale Condos
- Certainty: With a resale condo, buyers can see exactly what they are getting. There is no need to rely on virtual tours or floor plans to get a sense of the property.
- Easier Financing: Financing a resale condo is typically easier than financing a pre-construction unit, as buyers can secure a mortgage once the sale is complete.
- Immediate Move-In: Buyers can move into a resale condo immediately, without having to wait for construction to be completed.
Disadvantages of Resale Condos
- Limited Customization: Buyers may not have the same level of customization options with a resale unit, as they would with a pre-construction condo.
- Higher Maintenance Costs: Because the building and unit are not brand new, there may be a higher level of maintenance and repairs required in the early years of ownership.
- No Warranty Coverage: Resale condos do not come with the same level of warranty coverage as pre-construction units.
Realistic Data and Comparison
To give you a better sense of the differences between pre-construction and resale condos, let’s take a look at some data and comparisons.
- Price: Pre-construction condos are typically priced lower than resale condos, as buyers are essentially investing in a property that has yet to be built. According to data from the Toronto Regional Real Estate Board, the average price of a pre-construction condo in the Greater Toronto Area was $743,120 in January 2022, compared to $777,998 for a resale condo.
- Maintenance Costs: As mentioned above, resale condos can come with higher maintenance costs compared to pre-construction units. This is because older buildings may require more repairs and upkeep in the early years of ownership. According to data from the Toronto Regional Real Estate Board, the average monthly maintenance fee for a pre-construction condo in the Greater Toronto Area was $0.58 per square foot in January 2022, compared to $0.71 per square foot for a resale condo.
- Appreciation Potential: While pre-construction condos may be priced lower initially, they may also have a greater potential for appreciation in value over time. This is because buyers are investing in a property that will be brand new when completed, which may be more attractive to future buyers. According to data from Condos.ca, pre-construction condos in Toronto have appreciated by an average of 56% since 2010, compared to 51% for resale condos.
- Completion Timeline: One of the main differences between pre-construction and resale condos is the timeline for completion. While resale units are available for immediate move-in, pre-construction units may take a few years to complete. This can be both an advantage and a disadvantage, depending on the buyer’s situation.
- Customization Options: Pre-construction condos offer buyers more options for customization, as they can choose finishes, layouts, and other features to fit their preferences and lifestyle. Resale condos may not offer the same level of customization, but buyers can still make changes to the unit after purchase.
In conclusion, both pre-construction and resale condos have their advantages and disadvantages. Ultimately, the decision to buy a pre-construction or resale unit will depend on the buyer’s individual needs and preferences. Those who value customization and potentially lower prices may prefer pre-construction units, while those who value certainty and immediate move-in may prefer resale units. It’s important to do your research and work with a trusted real estate professional to ensure you make an informed decision.