There are many pros and cons as buyers are making the decision between investing in resale vs. pre-construction – for some its not an easy choice but the reality is, the answer is simple in today’s economy. Some buyers are choosing to approach resale properties due to the alluring reduction in price comparison to similar pre-construction offering. However, qualifying for a mortgage is a challenge. The increase in rates has made it even more difficult to qualify for mortgage and a lot of people are falling into difficulties and pitfalls trying to do so.
Whereas, pre-construction allows you to bypass that and not have to consider the mortgage market for four or five, even six years, down the road. By then, the economy will be more stable and mortgage rates will be down making it easier to qualify.
“Alluring reduction in price is deceiving and can also be misleading as the reduction in price isn’t necessarily a drop in condo prices – instead its desperate sellers having to sell due to influx and impact by interest rates,” says Costas Kivelos, Founder of Pre-Construction Condos
When it comes to pre-constructions, those that recognize the opportunity in pre-construction deposit timelines and future appreciation are putting down payments with less risk and waiting for when interest rates turn more into their favour to take a mortgage.
Comparing appreciation for your property
Traditional resale as an investor means you buy a property (house, condo, etc.) and you rent it out immediately. However, the bigger picture is that resale after a few years slows down in appreciation and has significant carrying cost and servicing the debit load.
With pre-constructions, the bulk of appreciation occurs during the construction process when investors are not required to pay extra taxes, mortgage, insurance maintenance and other costs. New product appreciates faster and higher than older product so for the first few years, investors are getting the maximum appreciation with their pre-construction.
“The goal is to always make the maximum amount in the least amount of time, with the least amount of effort.” – Costas
Still not convinced? Canada’s population is expected to double to 74 million people by the year 2068 due to a steady flow of immigrants from throughout the world, reports Statistics Canada. This means that that the supply for real estate will continue to strengthen to match the growing demand.
Statistics Canada states, “If Canada’s population continues to increase in the future, it will be mainly because of immigration, which is expected to remain quite significant in the coming decades, albeit at varying levels according to the different growth scenarios.”
In conclusion, do what’s best for you financially with consideration for the appreciation and the long-term impact based on the growing needs of Canada. If you’re still unsure, set up a chat with Costas and continue the conversation.