Thinking of Purchasing a Pre-Construction Condo or Home?

Without enough properties on the market for sale in the GTA to meet the demand from Buyers, construction can be a great option but do it with your eyes wide open.

The real estate market in Oakville, Burlington, Toronto and across the GTA is hotter than ever! It’s definitely a Seller’s market with a shortage of homes for sale and a continued demand from Buyers. Some Buyers have opted to buy a pre-construction home or condo — a great option, however issues may arise from time to time.

The possession date of a pre-construction home can be two or more years from the date you contract to purchase. A lot can happen in that time: construction costs can rise, real estate prices can rise or fall, mortgage rates can increase.

In a recent story by CBC News, Ontario condo developer suddenly cancels years-long sales deal — unless buyers pay $100K more | CBC News, the developer sent a letter to its early Buyers stating that the company requires more money because of increased costs of raw materials and labour related to the pandemic, sometimes "upwards of" 60 per cent.”

“Margaret and John Geniole purchased their bungalow unit in 2018 for $442,000 with an estimated closing date in the fall of 2020. They sold their house and moved in with their daughter in the meantime, but the project was delayed twice — before the pandemic began — to the spring of 2022. Now they're faced with the choice of paying the additional $100,000 and hoping to move in next spring or taking their $25,000 deposit back, even though it's worth considerably less in the GTA housing market than four years ago.”

These Buyers must now try to provide additional funds or face being thrown back into a Seller’s market with prices much higher than they were when they made their decision to purchase pre-construction. The reverse can also happen. In the last downturn of the real estate market, Buyers were dismayed to find that the properties that they contracted to buy were worth less than the contract price. This led to issues with mortgage financing.

It’s a wonderful feeling to move into a new house or condo that has never been lived in, however my advice is to consult with your real estate lawyer so that you fully understand all the legal implications of buying new construction.

Another option is to buy a resale property. This can be equally exciting because it’s possible to find properties that have been beautifully upgraded or recently renovated, or you may want to buy the perfect renovation project in the ideal location that you can transform into your dream home.

Whether you’re buying or selling, it’s important to know the market and your options. With decades of experience, I’m happy to provide you with a no-obligation consultation to help you make an informed decision.

Call Lynne Blott at 416-540-7307 or e-mail at lynne@lynneblott.com