Written by Sean Cooper
Friday, April 20th, 2018
Homebuyers face many tough decisions. Should I go with a fixed or variable mortgage? Should I buy a detached, semi-detached, townhouse or condo? Another tough decision is whether to purchase a new or resale home. This is a personal choice for many. Some buyers will only buy new homes, while others will only consider resale homes. Let's take a look at some key factors to consider when deciding between a new and resale home.
Upside: Similar to that new car smell, there's nothing like that new smell of a home! New homes offer a turnkey approach. With a new home, you can customize the design to your liking. You don't have to spend a lot of time and money renovating. If you want granite countertops, hardwood floors and stainless steel appliances, you can usually request them from the builder (provided you have the money and you're willing to pay the builder's price). If something costly goes wrong — for example with the heating or plumbing — builder warranties are included in most provinces, offering homebuyers extra protection. Lastly, homebuyers can usually budget less towards maintenance and repairs since everything is brand new.
Downside: With a new home, builders typically require a 20 percent down payment. Although it's broken up into smaller deposits, especially for first-time homebuyers in high-priced real estate markets like Toronto and Vancouver, if you're struggling to scrape together the minimum down payment, coming up with 20% down may be too much to manage. On top of that, you have to pay GST/HST on the purchase price of a new home. You're also typically buying something based largely on floor plans. When the home is finished, it may be different from what you had envisioned. The neighbourhood might also be light on amenities, since schools and malls may not be built yet. On top of that, there could be builder delays, leaving you to wait longer for your dream home.
Upside: With resale homes, what you see is what you get. Unlike a new home, you're buying something that's already built. Although you can't customize to the same extent that you can a new home, in most housing markets there are more resale homes available than new homes, giving buyers more options and styles to choose from. Some buyers enjoy the “charm and character" older homes offer. When you're buying in an already-established neighbourhood, the amenities are usually already there. You also don't have to pay GST/HST on the purchase price.
Downside: A downside of resale homes is that maintenance and repair expenses are usually more costly than a new home. Since the home is older, things tend to break down and wear out faster. The roof may need to be replaced or the furnace may be on its last legs. Resale homes sometimes come with surprises. After you move into the home, you may discover dated wiring hidden in the walls or a leaky fridge. Lastly, resale homes may come with dated designs and be less energy-efficient, meaning more money over the long-haul for homeowners.