Buying Resale VS Pre-Construction Condos in Mississauga
Over the past few weeks, I had several clients inquire about investing in Square One condos. One question that seems to arise is whether pre-construction condos or resale condos are the better buy. Clients, regardless if buying for principle residence or investment purposes, want to make sure that their real estate purchases appreciate accordingly with the market, and that when they wish to cash out on their condos they have the option to do so.
In this blog article, I hope to give some insight into buying both new and resale condos in Mississauga. I want to cover new and resale condos from both a primary residence and investment perspective.
Prices of pre-construction condos in downtown Mississauga are currently between $420-470 a square foot. To put into perspective, a one bedroom plus den condo that is 650 square foot goes for roughly $270k-$310k. These prices may seem high to some people, but keep in mind that places like Toronto are currently selling between $600-800 a square foot for pre-construction condos. Although, Toronto and Mississauga differ in many ways, this does suggest that the prices of Mississauga condos still have room to grow.
Some people are under the impression that pre-construction condos are cheaper than similar existing condos. This however is not the case. According to my recent observations and market analysis, prices for pre-construction condos are in fact the same or even slightly more (roughly 2-8%) than resale condos. There are numerous reasons behind this. I would argue that the main reason, why pre-construction condos are not cheaper than resale condos, is because of the phenomenon which I like to call “Buying tomorrow’s real estate at today’s prices.” – Meaning, when you buy a pre built condo today, you are more or less paying the market price of today’s resale condos, but you are getting possession of the condo unit in 2-3 years. Hence, the speculation is that by the time you are ready to move in, the real estate market will have appreciated and the condo unit you have bought a few years back will be worth more.
I find that the way pre-construction condos are set up, that they mainly target investors. Not many people are in a financial position where they can afford to dish out $50,000+ on a down payment for their new pre-constructed home, wait 2-3 years until it’s complete and still be 100% confident that the condo they bought today will work for them 2-3 years down the road.
One of the biggest advantages of buying a new condo in Mississauga is that it’s a near worry free investment. Over the past decade people have been buying pre-built condos in Mississauga and capitalizing $30k, $40K and even $50k. With the help of a real estate agent, the process is very simple and straight forward. With most builders, only a 15% down payment is required within the first year and there is no need for mortgage approvals until the date of occupancy.
For those thinking of buying a pre-construction condominium as a principle residence, they should know about some of the perks that come along with this decision. One such perk is that you can choose the layout, floor and finishes according to your personal taste and life style. Another advantage might be that you get a brand new never before lived-in unit.
Although the purchases of resale condos in Mississauga are often similar to pre built condos, the entire process of buying and the strategy behind investing is what sets them apart.
Most people, who buy resale condos, purchase them as a primary residence and not as an investment. As mentioned above, newer resale condos are similarly priced to pre construction condos. Sometimes they are even cheaper than similar pre-construction condos that are offered a block away.
Unlike pre built condos, resale condos offer the option to qualified buyers to be purchased with as little as 5% down. On top of the low down payment structures, advocates of resale condos point out that the buyer has a chance to view the actual condo there are buying and not just a floor plan. Having a flexible move in day is also an advantage worth pointing out.
However, there are certain limitations to buying resale condos. Those who consider buying a resale condo as an investment purpose should consider the challenges they could face with tenants. Also, it is imperative to keep in mind that (historically speaking) resale condos simply do not appreciate as much in value as pre-construction condos. The end result of this is a lower return on investment for the person buying a resale condominium.
In conclusion, every client’s situation is unique and different. There is no universal fit-all answer to what is considered better, pre-construction condos or resale condos in Mississauga.
While the possibility of having higher financial gains over a specified period of time is greater with pre-construction condos, critiques point out that the possibility of gain is dependent on having a strong positive real estate market like we had in the past decade. At the same time, pre-construction condos offer a potential effortless path to making a substantial amount of money in a short period of time.
Resale condos on the other hand, are primarily attractive to those who want to minimize the consequences should the real estate market crash. However, by doing so, those who invest in resale condos often have to deal with tenant issues. Finally, the income produced with resale condos is substantially less than the potential income that could be gained with pre-construction condominiums.
If you are still unsure which direction you want to head in, I would advise that you contact me, so that we can go over all your options and find out which is best suited to you and your life-style.
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