Buying a new property can be great. You get a never lived in before property that is all your own. You can get to customize it to suit your needs and you can get some degree of warranties with it. This allows for a degree of comfort and why many people opt to go with new construction.
As you may have heard in the news recently, their have been some issues with deposits. This is one of the big risks with buying pre-construction. If you haven’t read the story you can get a bit of a review by clicking the link above.
Long story short though, if you haven’t heard about it yet, Mady Development had the MarketTown project in Barrie and they had some serious financing issues. As a result they have yet to be able to continue with the project. Leaving those who left deposits stuck in limbo.
While they should eventually get that money back since it is held in trust, it can often be tied up for a long time. Many need that money to purchase their next home so they cannot buy their next one until they get that deposit money back.
This is how buying pre-construction can backfire. Your deposit money is tied up for a long time. While this rarely happens the way the real estate market has been in the GTA it is still a risk you are taking.
So if you plan on buying pre-construction, just be aware that it means your deposit money is going to be tied up for a while. Delays in construction can mean your money will be tied up for even longer as well. It doesn’t take much for construction to get delayed.
New builds can still be a great option for many buyers. You still need to be aware of the risks involved with putting a deposit. Especially on a building that won’t be ready for a few years.