Condo Real estate in Toronto
Is buying condo real estate in Toronto from a builder more profitable than buying a condo on the secondary market? Many people assume that buying a condo at the stage of construction should be much more profitable than buying an apartment in a condominium on the secondary market.
In fact, in Toronto, the situation is just the opposite - that is to say, buying from a builder is not always beneficial. More precisely, in most cases, buying on the secondary housing market is much more profitable.
When you buy a house or a condo on the secondary market, you have the opportunity to see what you buy, that is to see all the advantages and disadvantages of a real apartment, as opposed to buying from a builder, when all you have is a plan of the apartment. At this stage it is very easy to miss defects.
Therefore, purchasing condo real estate in Toronto from a builder is to some extent like a lottery - you could win, or lose. It often happens that the buyer who bought an apartment in a newly built condominium, realizes that he did not make the best choice and is forced to sell the apartment at a bargain price.
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Undoubtedly, these problems can be avoided if you purchase with the help of an experienced realtor who can foresee all possible problems and protect you from them. But when you are buying a condo from a builder, there is always a certain amount of risk.
Another advantage of buying condo real estate in Toronto in the secondary housing market is that you can move in and live in the apartment immediately after purchase, or to start renting it out right away. In case of buying from a builder, you will have to wait a year and a half. There is another disadvantage to this.
If you apply for a mortgage to buy a condo, you will get it only when the apartment is ready. If you are buying on the secondary housing market, you can get the mortgage almost immediately at the time of purchase, with the interest that is in force at the time of purchase.
In case of buying an apartment from a builder, you will get mortgage only about a year and a half later, when the construction is finished, and you become the full owner of the apartment. But it is unknown what will be the interest rate on the mortgage at the time of purchase.
Likely, it will be higher than the one in force today, since the current bank rate is close to its historic minimum.
The cost of condo apartments on the secondary market is determined based on supply and demand, while prices of apartments in buildings under construction are set by the builder and they are often higher than the average.
For example, the average price per square meter in newly built condominiums in Toronto is $ 6,921 CAD, while in the central part it reaches $ 7,782 CAD. For comparison, the average price per square meter in a condominium on the secondary market is $ 4,026 CAD throughout the Greater Toronto, $ 5,242 CAD in Toronto, and $ 5,576 CAD in the downtown area.
Although in practice the difference in cost per square meter is not as dramatic, given that the average price in the secondary real estate market takes into account all condominiums, regardless of their age and quality, but the picture is illustrative in any case. Thus, there is no definite advantage of buying a Toronto condo from a developer.
It's also worth noting that when you are buying a condo real estate in Toronto in a building under construction, a lot depends on the purpose of the purchase, your financial situation, where the building is located, what kind of condo you are buying and where it is located in the building.
Before deciding whether it is more profitable to buy condo real estate in Toronto from a developer or on the secondary market, you should consult an experienced real estate agent, who will be able to evaluate your situation and recommend the best option.
Whether buying condo real estate in Toronto from a builder is profitable or not, really depends on the trends in the real estate market, on the economic situation in the region, as well as on what and where you purchase, and on what terms. And do not ignore the hidden charges, which may cancel out all the benefits of investing.
Builders begin to sell apartments in high rise condominiums at the stage of foundation, and continue selling until all the apartments are sold out. However, as a rule, no matter how many apartments are sold, construction of the condominium does not stop until it's finished.
It is much easier to find a condo for sale in Toronto in a newly built high-rise building than to find a detached house from a builder. First, there are not many companies that build high-rise condominiums and it's easy to check them.
If you check the projects already completed by this company, you can tell if the new project will meet the stated plans when it's completed. You can also easily assess the area in which the condominium is being built - usually it occupies a small area inside an already existing complex of buildings.
A great advantage of new high-rise condominiums is that they look modern, and, as a rule, they always attract attention. Another plus is that during the first years condo fee is usually much lower than in similar condominium that is 10-15-year-old, as new buildings do not require many repairs.
The downside is that the contract for condo real estate in Toronto is quite complicated, and contains many clauses. If you are buying a condo, you should always carefully examine the set of documents that defines the relationship between residents and administration, but if you buy an apartment from a builder, you need to read and understand a great package of legal documents.
When buying condo real estate in Toronto from a builder is profitable :
- The newly built-up area should be actively developed and eventually become popular. Therefore it is necessary to weigh all the factors to determine the chances for this construction area to become popular. For example, whether there will be a subway station, or cultural or sport objects, how soon, to what extent, etc.
- The building should be of high quality. If you need to invest any additional funds to improve what is being built, it has an extremely negative impact on the profitability of such purchase. But that's not all. If poor-quality houses are located near your house, they will constrain the growth of property prices in this area, and even lower them.
- There shouldn't be any factors that can dramatically lower prices in the area in the future. For example, is a budget accommodation for the poor will be built in this area, or the surrounding industrial area will expand, it will have a negative impact on prices in the area.
- There should be a trend of price growth at the real estate market. It's worthwhile to consider how strong is the inflation at the moment, and what are the dynamics of growth in condo real estate in Toronto prices.
For example, there are times when it's advantageous to buy an apartment in a condominium that is being built. If there the dynamics of growth in property prices are high and the demand for condominiums is strong, you can greatly benefit from the difference in prices by the time of construction completion.
However, when a lot of condominiums are being built and condo real estate in Toronto is blooming, and the dynamics of prices growth are close to zero, such investments is not profitable. Besides, if there is a positive growth in prices, it is not just for new housing, but for all the real estate in general.
Investing into condo real estate in Toronto that is just being built makes sense only when you do it for investment purposes, and are not going to live in it. Then you wouldn't need to worry about keeping you owned the property in good condition during construction. If you buy an apartment for yourself, then you it's important for you to move in as soon as you buy a condo.
If you are interested in buying condo real estate in Toronto, I recommend you to turn to Helen Riabinin, Sales Representative, Century 21 St.Andrew's Realty Inc., whose original articles I used on this website.