When Buying Pre-Construction
An article caught my eye this week, highlighting the perils of buying Pre-construction. In theory there are so many advantages.
- The shiny new home
- Customization, choice of land and location, colours, and floor plan
- The appreciation effect as the neighbourhood takes root
- Holding the price, in an upward market. (Not unlike a Stock option call)
- The smell of new wood and VOC’s (Volatile Organic compounds) in the morning.
Unfortunately in the turbulent housing market there is indeed risk. When a builder contract goes firm the risk moves from the builder, right onto the buyers shoulders.
- Building of the home is a process that could take years.
- The dust and noise of bulldozers on your street for months and months could drive you insane
- Builder contracts lean toward giving the builder real flexibility on closing dates
- Mortgage rates and your Mortgage approvals may of changed at time of final closing
- The housing market, with or without government interference, changes
- The new neighbourhood and /or home construction could leave you wanting and frustrated
A shout out the Hamilton Spectator for highlighting the plight of these good families and good people who got caught in this perfect storm. A housing bubble, Government interference, interest rate increases, & OSFI regulation changes. Remember to work with professionals and get good advice whenever possible. The builders in Ontario do wonderful work for families and communities. However, most of them are “For Profit” organizations. As a final note: Its sad to see that our government did no calculations or research on how many families would be negatively impacted before implementing the Fair housing plan in 2017.