When buying any commodity, new is often better than used. In the housing market, though, your best opportunity can come from an old home or, as in Ottawa, where the inventory of new homes is overstocked, you may be able to purchase a new home for the same price buyers paid years ago. Here are some advantages and risks of both options.
Advantages of Buying Old Properties
you can physically walk through and inspect the home
similar listings have sold or are currently available to use for comparative market analysis when establishing price
antique homes appeal to a large group buyers, renters and investors
builders and developers can try to maximize land value by subdividing
investors can renovate the property to increase profitability
do-it-yourself enthusiasts can invest sweat equity to reduce repair or upgrade costs
Advantages of Buying New Properties
they have all the latest technology and comply with the Ontario Building Code
you can choose custom finishings rather than inheriting someone else's choice
new homes come with a warranty
new properties are generally lower maintenance
low energy ratings make them cheaper, reducing ongoing operating costs
financing may be easier since builders often arrange mortgages as part of the sale
for investors, tax depreciation benefits could reduce the holding costs of the property
Risks and Concerns of Buying Old Properties
existing properties can have structural or mechanical issues so check the age of major components and employ a building inspector to identify hidden concerns
if you need repairs or upgrades, a building inspection will help during negotiations
easements or caveats on the title may affect your plans for the property
check ownership on title and vendor warranties to ensure a smooth closing
if renovating or sub-dividing, make sure your plans comply with zoning regulations
competing, emotional buyers can drive up property prices during negotiations or auctions
Risks and Concerns of Buying New Properties
risk of construction delays and possible cost overruns that increase the price
you pay HST/GST on a new home, which adds to your costs
in a new subdivision, little, if any, infrastructure exists
similar properties, in the same area, may be slow to grow in value
apartments in a recently zoned area could be in over-supply and tough to rent out
beware of growth corridors because you could have a long wait for profits
choose developers carefully and run background checks on associated parties