Buying New? Have You Thought It Through?
It's the age-old home debate - new homes vs. resale. It's especially pertinent in the Oakville area where I work as a Real Estate Agent. On August 11, 2009 it was announced the town of Oakville will be increasing its development fees levied on homebuilders at the end of August to the tune of almost $8,000/home. It will generate almost $626 million to pay for things like roads, libraries, fire stations, parks and community centres - infrastructure needed with new residential subdivisions. I believe strongly in infrastructure upkeep in communities. It is important to note however that these are some of the highest development fees under law. Oakville is a growing township. We currently expect 14,429 new homes by 2018, and an additional 33,034 homes by 2031! Oakville mayor, Rob Burton has said it is "essential to minimize the impact of growth on taxpayers...to keep Oakville fiscally sustainable." Development fees for single-family dwellings will increase by 63%. Instead of $13,000, the builder will have to pay the town of Oakville almost $22,000. I know specifically of one instance where a $600,000 condo has $28,000 in closing costs.
Which brings me back to the topic at hand - are new homes all they're advertised to be? As a buyer, you typically only see the GREAT PRICE from the builder, but closing costs can be huge. The land transfers and legals alone could be upwards of 10% of your price. So I say BUYER BEWARE!! Be smart about your choices. Be smart about builder upgrades. Remember, on a $500,000 home, there could be a potential $150-200,000 in upgrades not mentioned in the advertising! Add to that - blueprints are typically difficult to read and interpret. And then there's the after purchase issues - window coverings, paint (please, please, please - don't keep that builders' white on the walls!), decoration, landscaping, fencing...the list goes on. Think of that new car you bought, and all the add-ons that came after your purchase price was agreed on - rust-proofing, winter tires, car mats, warranty etc.
You need to realize that a 2 year old home may just give you a better return on your real estate investment than a new home. You need to know yourself - if it's a new development, you may be subjecting your family to a dusty, muddy neighbourhood with no grass, and outdoor areas you can't use for the first year. And don't even get me started on your dog's muddy paws!!
Now, don't get me wrong, buying new is a great option for some of us - just not all of us