When it comes to buying a condo in Toronto, you've got two options: resale (buying a unit in an existing building) or pre-construction (buying in a development that hasn't been built yet). It's certainly hard to miss the sexy marketing for developments in the city’s coolest ‘hoods. But while pre-con has some definite benefits, it has some negatives too. Same goes for buying resale. What's right for you depends on your budget, your timeframe and your comfort level.
Resale: the pros
PRO: What you see is what you get. Buying a unit that already exists means you can walk through the door and see what it looks like, how big or small it feels, and get a sense of the layout in real life – that's a lot harder to do when you just have a computer rendering to go on.
PRO: You can move in fast. When you buy resale, the closing date is firm, so you know the exact day you'll be able to move in and start paying off your mortgage.
PRO: The building has had time to work out its kinks. If the building has been around for a while, staff have gotten used to running things, the condo corporation has built up a decent reserve fund (hopefully!), and all the growing pains and deficiencies that are par for the course in a brand-new build have been worked out.
PRO: You move into a finished building. The amenities are up and running, landscaping is done and there's been time for residents to establish a sense of community.
PRO: You can find out who lives in the building. The status certificate should tell you the percentage of renters versus owners in the building, which is good to know. Buildings with a lot more renters tend to feel a bit more transient. Having a higher percentage of owners is desirable for most buyers, since it increases pride of ownership and community.
PRO: You can often get better value. Resale units (as pricey as they may feel) are priced according to today's market value. Pre-con is priced based on projected value two or three years down the line, so it’s not the “deal” it used to be.
PRO: You can still get into newer buildings. Just because it's a resale doesn't necessarily mean it's old. Units in relatively new buildings come up all the time as people’s situations change. For example, now that Airbnb rules have changed, folks who bought in as an investment may not be able to use the unit as they had originally planned, and will want to sell.
Resale: the cons
CON: The finishes are someone else’s taste. If you had your heart set on granite countertops or you hate the bathroom tile, you'll have to live with it until you're able to change it yourself.
CON: You may need to reno. If the bathroom needs an upgrade, the carpets have seen better days, or the layout would work better without that weird half wall, you'll need to add the cost (and hassle) of renovations to your buying budget. On the other hand, if it's something you can live with for a while, a reno is always something you can do down the line.
CON: There's less to choose from. Instead of having multiple units and layouts to choose from, you'll probably have just the one unit that’s up for sale.
CON: Bidding wars. Everyone wants a nice condo in a great building and a good location. Problem is, there aren't enough of them to go around, so you're likely to face some pretty stiff competition. Bidding wars can be stressful – and disappointing if you don't win.
Pre-con: the pros
PRO: It's brand, spankin’ new. If the idea of a fresh new space no one else has ever lived in before appeals to you (gotta love that new condo smell!), pre-con definitely offers that.
PRO: You can really make it yours. You get to choose everything from flooring to bathroom tiles to door hardware. You can also select the layout that suits you best and decide what floor you'd like to live on.
PRO: Your pricing is locked in. Yes, you'll have to wait years for the condo to get built. But your price is the price. It won’t change and there won’t be any bidding wars.
PRO: You can take longer to save your down payment. The deposit structure for pre-construction is stretched out over many months. So instead of having to hand over the whole down payment right away, you might have a year to come up with it – without having to worry about the unit going up in price. If you took a year to save a down payment for a resale unit, on the other hand, you’d be entering the market after year’s worth of price increases. In this market, that could be a huge difference.
PRO: New home warranties. New builds are protected by Tarion, so if there's anything that's missing or not working properly, it's covered.
Pre-con: the cons
CON: Pre-construction is a waiting game. When you buy before a building has broken ground, it will probably be years before you can actually move in. And even if they give you a completion date, there's a good chance it won't be finished in time. A certain percentage has to be pre-sold before they can start building, and pre-selling can be quick – or not. Plus, there are inevitable delays – everything from weather to materials not being delivered on time to availability of skilled labour. Legally, builders can go 18 months past the promised completion date before they have to give your deposit back. (Which still isn’t great, since it won't be enough to snag a similar unit a couple of years later).
CON: The finished product can be hard to picture. It can be tough to visualize the unit based on renderings.
CON: You may end up paying a “phantom mortgage.” The time between when a building is finished and when it's legally registered as a condo corporation can be a bit of a “limbo” situation. Before becoming a corporation, it doesn’t have a title yet, so ownership can't be transferred to individual owners. And that means you can't start paying your mortgage. What you end up paying instead are Occupancy fees, which go to the builder and not towards your mortgage.
CON: You could end up living in a construction zone. Most condos move people in gradually as each floor is completed, with lower-level units opening up first. So if your unit is on a lower floor, you're looking at living in a building that’s still under construction. And that means noise, unfinished amenities, workers in the building, etc.
CON: You have to have an “in” to access the best units. Even if a building has just announced its first release and you’re first in line to buy, all the best units will already be gone. What?! Yep- that’s because agents who have relationships with the developers get first pick. Whatever’s left over is what’s released to the public. So if you want a great unit in a hot building, you can’t just walk into a sales centre. You have to be working with a top agent who has those relationships. But not to worry, condos.ca has those connections, so if you’re looking at buying pre-con, talk to us first. We’ve got you covered.
So there you have it…pros and cons for both options. But whatever you choose, a Condo Pro can help you navigate the complexities, understand the good, the bad (and the occasionally ugly) – and land you in a condo you'll love.