The average price of a resale condo in Toronto was $799,966, up 24.5% year over year as of February 2022, according to Toronto Housing Market Report. This trend is expected to continue as the city's population continues to grow.
With condo prices continuing to rise in the Toronto and the GTA area. Pre-construction purchases offer an opportunity for first time home buyers. Pre-construction condos offer a number of benefits over other types of investments, such as a stable long-term investment that is relatively passive.
As Toronto's population continues to grow, the average price of a resale condo in the city is expected to continue to rise. Pre-construction purchases offer an opportunity for first time home buyers as they offer a number of benefits over other types of investments.
Five Advantages Of Buying A Pre-Construction Condo
1. Deposit Structure
One of the advantages of buying a pre-construction condo is the extended deposit structure.
For a pre-construction condo, the deposit is usually between 15%- 20% spread out over 18 - 24 months. Which is much easier for most buyers than having to come up with a lump sum all at once. This can make it much easier to save up for the down payment, and also gives you more time to get your finances in order before the closing date.
Additionally, the extended deposit structure can provide some flexibility in terms of when you need to pay the remaining balance. For example, if you're not able to get a mortgage until after the construction is completed, you can often arrange to pay the balance of your deposit at that time.
There are many advantages to investing in a pre-construction condo. One of the most appealing factors is that it can be a very stable long-term investment. When you purchase a pre-construction condo, you are effectively locking in the price of your unit at today's rates. This means that, no matter how much the cost of construction rises in the future, your closing costs will remain the same.
Unlike stocks or other commodities, real estate is not subject to the same volatility. In addition, as the population continues to grow, there will always be a demand for housing, which helps to ensure that values will continue to rise over time.
3. Hands Off
Owning real estate in Toronto can be both an exciting and lucrative experience, but it can also be a highly hands-on experience. As a result, many potential buyers and investors choose to walk away from it.
One of the most significant benefits of buying pre-construction is the first three to five years, the construction is entirely passive. Which is why investing in a pre-construction condo can be a hands-off investment.
Once the development is complete the investor can retain a qualified realtor to rent out their property. This can provide an ongoing source of income with very little effort required on the part of the investor.
All new construction homes in Ontario have full warranty up to 7 years called the Tarion Warranty. If anything goes wrong in the first few years it is generally the responsibility of the builder to fix it under the warranty.
4. You're not fighting another buyer for the property
One of the most appealing factors is that you're not fighting another buyer for the property. When purchasing resale property, most desirable condos frequently endure heated bidding wars.
In a hot real estate market, it can be very difficult to find a home that meets your needs. By purchasing a pre-construction condo, you can be sure that you'll get the unit you want. You also have the opportunity to customize your unit to some extent, which can make it even more valuable to you.
Another advantage of buying a pre-construction condo is that you have what's known as the 10-day cooling off period. During this time, you can have a lawyer look over the contract to make sure that you're comfortable with it. If for any reason you're not happy with the contract, you can cancel it without penalty.
5. Brand New Unit
When it comes to purchasing a new home, many buyers find themselves torn between buying an existing home or a pre-construction condo.
While there are benefits to both options, there are some compelling reasons to choose a pre-construction condo. Perhaps the most obvious benefit is that you'll be the first person to live in the unit, which means that everything will be new, from the appliances to the floors.
Additionally, you'll often have the opportunity to personalize your unit to some extent, such as selecting your own finishes and fixtures.
Additionally, many pre-construction condo developments are located in desirable areas that may be difficult to access as a resale buyer. For example, you may have your eye on a particular neighbourhood that is currently undergoing gentrification.
By purchasing a pre-construction condo, you can get in on this process and enjoy watching your investment grow along with the neighbourhood.
Buying pre-construction condos is a great idea for many reasons. For one, you'll lock in the price of your unit at today's rates which means that no matter how much the cost of construction rises in the future, your closing costs will remain unchanged.
Additionally, as real estate prices continue to rise and populations grow, there always be a demand for housing, which helps ensure that values will continue to appreciate over time.
Finally, when you buy pre-construction, you're essentially getting a brand new unit without having to deal with any of the hassles or headaches associated with renovating an older unit.
All of these factors make pre-construction condos a wise investment for anyone looking to buy a property in Toronto.
When you're ready to take the plunge, take a look our platinum access condos, or give us a call. You'll be working with a qualified real estate professional who can guide you through the process and help you find the perfect unit for your needs. If you're still doing research, read our blog on these top mistakes to avoid when buying a pre-construction condo.