As the temperatures are reaching our seasonal lows, winter is truly starting to set in. Christmas will soon be upon us, and following that, we will be ringing in the new year as well as new hopes and dreams. At this time of year, there are typically more distractions with family and work obligations and less talk about personal needs such as housing. This is exactly why we are seeing some amazing offers from developers in the presale market, which is a key purchasing opportunity we want to bring your attention to today!
We are often asked if it is a good time to buy a presale and we usually defer to the type of market we are in at that moment. In a seller’s market, buying a presale as soon as the project is released is the most profitable time, while in a buyer’s market, we would advise our clients to wait for the deals to be offered. In all cases, the developers will always price in a bit of a premium to factor in the eventual appreciation.
But what happens when the market has slowed down like what we are experiencing right now?
The answer is...
Buyer incentives! We are seeing some generous offers right now such as:
- Rebates for decorations: The price of the home must stay the same, as the developer has a vested interest in keeping the prices moving forward. However, they can offer a discount after the completion date in the form of a rebate.
- Free upgrades: Higher quality appliances, extra parking spots or storage lockers, custom closets are all possible upgrades – that you can acquire for free!
- Lavish gifts: Trips to popular destinations, luxury goods, and large denomination gift cards are examples of gifts being handed out by builders lately.
- Prepaid strata fees or mortgage payments: As everyone is struggling with the higher interest rates, some developers have committed to covering the costs for a fixed period. We have seen up to 2 years of coverage for strata fees or mortgage payments, being offered.
- Lower mortgage rates: Borrowers are allowed to buy down the interest rates with their lenders, and some builders have offered to do this on behalf of the buyer. We have seen a 2% buydown for a period of 3 years offered for some projects. This is beneficial for a few years to help you ride out the higher rates.
This all may sound great, but it all comes down to the main question - it a good time or not to buy a presale? We personally believe it is, for the following reasons:
- Timing: Most experts and economists believe that the interest rates are at their peak now, and that we will start to see some easing as early as mid-2024. A presale project typically comes with a 2–4-year timeline which bodes well for timing of your future costs. After putting down your deposit, there are no more fees or payments to be made until the completion date. You will not be required to apply for a mortgage and get locked into these higher rates, and instead, you will take the advantage of time as the economy settles down and stabilizes.
- Mortgage rate holds: Although we all believe that by the completion date, we will see lower interest rates, some banks are willing to lock in a rate for you today. There are 2 advantages to doing this. First, you have some certainty. In the event the rates keep going up, you have something saved for you. Secondly, if the rates are lower when you take possession, you are guaranteed the lower rate. There is no downside to doing this.
- More choices: You don’t often get to buy a presale without an invitation and/or lining up for a few days but recent bans on foreign purchasers and more stringent taxes on speculation means that less people are qualifying to buy a preconstruction home. You can take some time to look around at a few options and even compare to the resale market. Less pressure means more guarantee of high confidence in your home purchase.
- Customizable: If you have looked around for a new home before, then you will know that no home is the perfect home. Buying presale allows you to make some customized choices on color schemes, upgrades on appliances, and added features such as EV parking, storage lockers and extra parking.
Is a new home in the cards for you? Perhaps after learning all there is to know about the advantages of buying a presale property, you may feel ready to step into the new year with a realistic hope for a new home! If you are looking for an opportunity to cash in on this rare chance to buy a new home at a decent cost, don’t hesitate to give us a call and we will happily discuss this option with you!