When debating between housing options, most people who want a turn-key property at some point look at their new construction options. Just like any other type of property, there are always some risks involved. Let’s identify what might be the risks with buying new construction:
Condos
-The builder starts at their highest price point from the start. Towards the end of a project, when the builder just wants to move on to the next project, prices WILL nose dive. Call it unloading if you will. There can sometimes be a huge difference between what the first buyer paid versus the same unit towards the end of a project.
-Owners have to deal with the initial kinks of running a new building. Adopting new rules, management company, getting the whole building to run smoothly
-Some fees you have to pay in new construction versus existing buildings: Capital Contribution (a 1 time payment of 2 condo dues to help build the reserve, will never be refunded), Estimated Taxes (until the property is assessed annually, the initial tax amount is estimated)
Townhomes & Single Family Homes
-All of the condo risks apply here as well
-Base pricing doesn’t include upgrades/finishes, so keep in mind that advertised pricing may not actually be what you end up paying
-The wait! If you buy before construction begins, you’ll likely have at least 4 months to wait before you can actually move in. Most likely, it’s 6-8 months (or more). During that time, interest rates can change, leaving you stuck at the same price but with a likely higher mortgage payment as interest rates are on the way up.
-Delays: weather, supplies, permits – there can be a number of delays that could impact your move-in date, which may leave you without a place to live if you’re working with a hard date on your current housing (think selling your current place or a lease expiring)