I have received a number of emails from readers recently asking me if this is a good time to buy a pre-construction condo in Toronto.
The pre-construction market is very different from the resale market. Buying a pre-construction condo is a much more speculative decision.
Buyers are speculating that the pre-construction condo they are buying today will be worth significantly more when it is completed 4-5 years from now. That is the principal reason for buying pre-construction.
This is very different from buying a resale condo. Buyers of resale condos are using the condo either as a principal residence or as an income property and as a result are deriving some utility from the condo beyond just the potential appreciation in value.
Five years ago the pitch for pre-construction condos was a pretty easy one. The resale market was very competitive with prices on the rise and pre-construction condos were selling for less than comparable resale condos.
Today’s market is a bit different. The resale market is now leaning towards a buyer’s market as the number of resale condos on the market for sale has tripled in five years while the demand has remained the same. Furthermore, pre-construction condos are selling for more than comparable resale condos.