New Build Vs Resale
Many people can’t decide between a new build or a resale.
Two big advantages of buying a new build are you get to pick everything, the model of the home, the flooring, the kitchen cupboards. Another really big advantage is everything is new, meaning all the high ticket items like the furnace, roof, windows have many years of life.
Although, many first-time buyers get caught up in the process of buying the new house and are blindsided by some things they don’t take into consideration.
A builder will generally target a neighborhood towards specific demographics. Many new build neighborhoods are targeting young families. Some will target adult living and others even target students. On the other hand, a mature neighborhood will generally get more of a mixture of ages, young professionals, young families, mature families, empty nesters. If you’re a young family, a new build area can be great because there will probably be tons of children the same age as yours that they can play with. Some people prefer to live in a neighborhood where there is more diversity in the age groups.
If you buy a new build, depending on whether you are the first or the last home to be built, can mean living in construction for months or even years. Nothing like having children or a dog with the mucky backyard in the spring. Also, it might take months or even years to get a paved driveway. Not fun for snow removal in the winter.
The mature neighborhoods can have more character, beautifully treed streets, properties with beautiful perennial gardens. You often can find a home where the landscaping has been completely done. With the new build, it can take 10 years before you have mature trees. It’s not only the time it takes to have a mature lot, but it’s also the investment. If you want a pool in your backyard, it’s definitely a lot cheaper to buy a resale home with a pool. Putting a pool in can be very expensive. You will only get 25 cents to 50 cents on your dollar when you go to sell.
Other things to consider are closing dates. With a new home, the builders closing date may be far out in the future. Then on top of that, you could have several delays in the closing. People can sometimes get carried away with all the upgrades. The final price of the home can be significantly higher than that base price you started with if you do too many upgrades or make changes to the plan. However, the same thing can happen in resale if you’re doing renovations. Sometimes the renovations end up costing way more than they were originally estimated.
The amount of money that you have to put down on resale versus new build is significantly different. The deposit on resale varies based on what house you buy and the city you buy it in. In Guelph, it’s around 3%. A normal deposit for a townhouse that’s in the $500,000 dollar range would be $15,000 dollars. For a new build, you typically have different installment payments at different phases of the build. A lot of times, you will have to have put down more than 25% before your home is built. That’s $125,000 dollars on that $500,000 dollar home. That is over eight times as much as resale.
It really doesn’t matter whether you buy new or resale. It’s just whatever you do, you want to do it with your eyes wide open.