Pre-construction Detached Home is Now Priced historically High, which makes Resale a more value-for-money choice
We always want to live in our dream home, right? Yes, the real estate market is cooling down, but the desire to own a dream home might get stronger! maybe this is the chance we can spend more time thinking about what’s the best home to buy.
For those who want to live in Nice Modern Detached home, there are 2 options: one is to buy a Pre-Construction, and the other is to buy a Resale of 1-5 years old Existing Home. Today let’s talk about these two options!
No brainer a Resale home might be any home you see from a street; you can see them as they have existed for a while. A Pre-construction does not exist yet when you sign the purchase agreement. You basically buy a future house from a developer who promises you they will build a home based on the agreed plan, design, and other features.
Time and Physical Existence are the two keywords to make the difference between Resale and pre-construction
At the Time of Your Signing of the Purchase Agreement, The Resale exists, but the Pre-construction does not exist. There is a time lag, and Due to time lag, the payment schedule and closing date will be different; Resale can be very certain about the closing date, most in 1-4 months, while Pre-con’s closing date might not be in such a near future, it may be 1 – 4 years depending on developer’s schedule and their ability to complete the project on time
Buying a Pre-Con is an attractive idea because the idea represents the desired architectural trend, fashion, and people’s imagination of their dream home.
Sometimes it’s more enjoyable by dreaming of a beautiful thing than actually seeing or holding it. Some people choose pre-con as they need time to save up money, so the time lag of pre-con properly matched their needs; Sometimes the pre-construction was priced equal to or even lower than the resale, which makes them more attractive. But anyway, A good reliable developer is key to making buying the pre-con successful as the developer is the guy who makes sure the house is delivered on time and with quality
For those who like pre-construction, you might need to think more before signing the purchase agreement. Why?
Since you can’t see the physical home, you might not be able to see the dislikes factors immediately like you can in buying a resale, so I would like to share with you today some frustrations by pre-construction buyers. It doesn’t mean Pre-construction is a bad idea it just means you need to make sure you think through the details of your purchase:
Here is the listing of 5 types of Frustrations faced by pre-construction buyers:
1. I can’t move in as scheduled as I got the letter to delay the occupation
2. There are some big differences between my home and the model house when I signed the purchase agreement. Yeah, I was told the model houses have a lot of upgrades, but I couldn’t imagine that making such a big difference. If I know I might at least add some of the upgrades such as stairs painting, ceiling pot lights, raised basement window, etc.
3. Everything is good, but I just realized my neighbor has a higher terrain than us, and I don’t want to be on the lower landscape.
4. What? I don’t have any appliances, I have to buy AC, garage opener by myself?
5. Wow! My home is still on a construction site, and the front and back yards are messy without a grass lawn.
Buying a Pre-con is exciting! But the Buyer needs to know A freshly completed pre-construction is still in rough shape, A new house handed over from a developer normally requires additional renovation before presenting to be Nice and Beautiful, and it might take 1-3 years to complete!
Here is the listing of the 5 types of possible renovation needed for a freshly completed home:
1. Home Appliances, Garage door opener installation, Curtains or shades customization
2. A nice customized painting to avoid feeling plain and boring
3. Finish the Basement from rough to nice,
4. Build decks or patios in the backyard or front yard,
5. build a swimming pool or other recreational facilities, etc.
Since pre-construction has those concerns why not just buy a buy Nice Modern Detached Home 1 – 5 years old on the Resale market? Yes, definitely it’s a nice option, and here are the strong reasons why it can be used as a very Smart Buying Strategy Now:
1. One to five years old resale home can be still very Trendy modern and close to a dream home;
2. Resale eliminates the problem that the developer delays the occupancy date or cancellation of the project, which unfortunately happen more frequently in the recent two years.
3. Resale guarantee What you see is what you get because it physically exists
4. A chance to live in a more mature neighborhood! A New neighborhood needs at least 5 years to get mature and be nice. A nice neighborhood means more stable families living here, more safety, and more beauty.
5. A chance to buy a fully developed newer home with a garden, swimming pool, and other elements that are not included in pre-construction homes;
6. A very easily ignored benefit is about mortgage, It will be a one-stop solution for buyers, the mortgage can be based on the total price including all swimming pool and basement renovations etc.,
Finally, there is also a very real thing for buyers to consider Resale NOW! Pre-construction now is priced historically High, which makes Resale a more value-for-money choice. Let’s see the numbers:
On July 2022, The Pre-Con Detached home GTA was priced at a 2.5million per unit, Resale average 1.36million, and Pre-Con ‘s price is 1.83 times Resale is 1.83 times; while even when peaking time in Feb 2022 the pre-cons price is only 1.45 times of resale, in lasting real estate peaking time April 2017 the pre-cons price is only 1.25 time of the Resale. This means the Pre-con has been priced Extremely High
• April 2017, Pre-Con Detached home GTA was priced at 1.5million, with Resale average 1.2million, Pre-Con / Resale is 1.25 times
• March 2020, Pre-Con Detached home GTA was priced at 1.4million, with Resale average 1.1million, Pre-Con / Resale is 1.27 times
• Feb 2022, Pre-Con Detached home GTA was priced at 2.6million, Resale average 1.79million, Pre-Con / Resale is 1.45 times
Hi, what’s your dream home like? Is that the question everyone can think about all the time? Yes definitely!