Why do all my brilliant schemes involve self- flagellation in one form or another?
I am Stressed the Fuck Out about homes and ceilings and money and all those other awesome things that have aged me more in the last 45 days than anything done in my wild formative years. I am worried that we won’t find anything that suits us, and worried that we will end up settling for things that aren’t perfect in the name of panic and jealousy.
In my near-constant stalking of MLS for new listings, I’ve seen several places that have piqued my interest, only to note that some sneaky sumbitch is selling units in a building that won’t be completed until 2010. This annoyed me almost as much as the listings for buildings that are 55+ (but don’t mention it until you’re three paragraphs in and calling your realtor), but then I started thinking: why *can’t* we potentially buy into a place that won’t be finished until next year?
I asked around on Twitter, and several people answered my most pressing question: how do you pay for such a place? I was worried that you would be responsible for making mortgage payments on a place you don’t live in as well as paying rent, but apparently that is not so: you make a down payment, and then you wait. Once you take possession, you start paying the mortgage you’ve already obtained at a pre-approved rate for a pre-approved amount and everything is super.
Think about it: a brand spanking new building with a shiny new suite in outfitted with our choice of either “Sun Kissed Pine” or “New Hampshire Mauve” colour schemes, surrounded by people who are just as new to the building as we would be and are therefore more likely to be careful with the property and surroundings? Having a warranty? Getting some sort of tax credit or rebate or exemption for buying new? Having sex where no one has ever had sex before (except for maybe randy construction men but let’s face it that’s totally hot)?
I’m aroused with both interest AND homo-erotic fantasies.
As with all my magnificent ideas, there are pros and cons to both buying new or pre-owned; things I’m probably not even thinking of: construction delays, funding issues, things being built on Indian burial grounds, etc. None of these, as terrifying as they can be, are even remotely close to the insurmountable scale of the most staggering issue of all:
I would have to WAIT.
I *hate* waiting. I lie awake at night filled with insomnia and angst because I am not already moving into my own home. A wait of this magnitude may very well kill me right in two, and then where would we be? We can’t afford a place large enough for all my many pieces should I completely lose it while rotting away in the Ghetto of North Vancouver. A wait like this would drive me COMPLETELY INSANE and there would be not a thing I could do about it.
Which, instead of deterring me like it would a normal person, actually makes me want to try it, for science: would I be able to contain myself for that long without exploding?
Should we look into buying new? I simply don’t know.
Pros:
- New! Shiny and new!
- Warranties!
- While we wait, we’d be saving scads of money!
- We’d have more to choose from!
Cons:
- Things could go wrong
- We might agree to something we would regret but be unable to get out
- Scary; I have no idea what we’d be in for
- I WOULD HAVE TO WAIT
Oh, there is much to think about.
delicious juice dot com 
We bought new, and it worked out quiet well for us. Shiny and fresh is highly awesome, though the building (like any new construction) has had its share of “oops!” moments with some issues of questionable workmanship causing things like flooding in some units (thankfully not ours). All covered by warranty, but certainly upsetting for the people it affected (and still affects, 2 years later).
The long lead up to the completion date also gave us the opportunity to save up enough scads of money to add to our initial deposit and have 20% down when completion time came, avoiding the CMHC fee, which was nice.
To address one of your cons: you can always sell your contract if you decide at some point the building really isn’t for you.
Though there’s another you might not have considered: new strata corporations are automatically assigned a default set of bylaws, which includes a restriction on pets to “one cat or one dog,” and being an original owner doesn’t exempt you from those bylaws. You’d have to apply for a special exemption from the strata council, or appeal to all your new neighbours to have the bylaws changed (by a 3/4 vote at an AGM or SGM) to allow for your menagerie. Or, you know, just don’t draw attention to your cat collection and hope nobody notices or cares. I’m pretty sure a few people here are doing that.
Overall though, despite the suckage of the waiting, it worked out pretty well for us. And if it’s the route you go, I highly recommend moving to a different rental anyway while you’re waiting. It’s a good way to do an initial trim of possessions before you move in, and it seems like you really need to get out of that godforsaken clusterfuck your building seems to be these days!
How much is the CMHC fee? How long did you have to save? 20% is a huge scary number; I don’t know that we could save that much in a year :x
I wouldn’t touch a new condo (strata) with a ten foot pole, but only for one reason. As mentioned above, there will *always* be things that are wrong with construction. And the new home warranty only covers the common areas of the building for 15 months. Then any costs to repair the common areas will fall to the tenants. A new strata may not have a contingency fund sufficiently built up as of that time, which means it’s coming out of your pockets directly through a special assessment or such (as opposed to indirectly, through monthly maintenance costs, which you have some control over).
With a 5% downpayment, the CMHC fee is 2.75% of the total loan amount (ie: mortgage). The percentage reduces with additional downpayment monies. It is a mandatory extra cost rolled into your mortgage (which then accrues interest over the lifetime), which is why most people try to come up with as much downpayment as possible.
Personally, if I were you and Ed, I wouldn’t worry about it so much. I would just get IN the market. This won’t be the last place you buy.
Here’s a link to the CMHC info: http://www.cmhc-schl.gc.ca/en/hoficlincl/moloin/hopr/upload/OPIMS65606-CMHC-Purchase-03-27-09.pdf
Don’t you have to pay GST on a new home purchase?
Personally, I wouldn’t buy new. Too much risk with delays and the fact you are locking 50K or whatever in a no interest, non guaranteed loan to the builder that you have to suit to get back if things go south. This is especially risky on a condo complex as you have to wait for an entire X-sized building to be finished before you can get in.
We already chatted about most of this stuff so I won’t get into that, but I wanted to bring up one of your Pros.
You said that buying new would give you more to choose from – this isn’t true at all!
Today it is possible that you have more new developments to consider than comparable properties on the used market, and that may be true.
THAT said, the cool thing about the resale market is how quickly it turns over. In 6 weeks, a significant portion of the resale market you see today will be replaced with shiny new-to-you properties while the new market remains the handful of properties you see now. And guess what? 6 weeks after THAT you have a whole new set, and this goes on every 6 weeks increasing all the choices presented far beyond what you’ll ever see if looking at new developments. See how much fun this is! It’s like math!
If you fall madly in love OMG have to have it with a new building, by all means add it to the list. That said, the places I’ve seen you get all tickly over have been quirky, fun places with character – exactly the kind of places that you can luck out on by diligently reviewing new MLS listings two or three times a week so you can jump the minute something catches your eye.
I’ll be the first to raise my hand and say TRUST ME, I know how stressful the whole mess can be. I also know that I almost settled by trying to buy the second place we offered on, and the universe had to jump in and stop me so I could get the perfect place when it came our way. I just need to know that whatever you do decide it is the ABSOLUTELY MOST PERFECT place for you, and that you’re going to love it to pieces. And, you know, that the whole process isn’t going to kill you right in two.
xoxo
If you do decide to buy new, wait till the HST rolls out. There is an HST exemption on new homes under $500,000 I think, which I assume you will be well under. If you buy new tomorrow, you pay GST on the purchase price, which is insane!
Calm down. You’re going to be paying for this for a long, long time and you’ll have to live with it. It’s not an impulse buy like buying a scooter or shoes or something, and there are so many variables that “perfect” will likely never be an option for a first time home buyer. Decide what your priorities are, and try to nail most of them. Most people buying their first home are looking at one thing, mostly: price. That usually narrows things down.
Not that I’m pushing buying new – but it’s not quite as scary as everyone else is making it out to be.
Our fees did go up 15% after the first year (developers set the fees notoriously low to make the property look more attractive), but there is a difference between “construction defects” and “warranty issues” – we’re still dealing with construction defects (which are covered by the developer) long after the initial common area warranty has expired. And that’s just a warranty on finishings. Our structural and envelope warranties are each 10 years. We have yet to touch our contingency fund.
You do have to pay tax (GST, HST, whatever) on properties that are new, or more than 80% renovated, though you get a rebate on GST if you buy a property now that’s under $400k, and it looks like the HST rebate will function similarly. Just google “GST new home rebate” or similar, and the info will be there.
As for the deposit not earning interest, that’s patently false. The developer must hold it for you in an interest-bearing account from the day you hand it over until closing. We got a cheque for about 5% on our deposit a month after moving in. You do have to declare that as income on your taxes though.
Miranda is right though, things are moving very quickly on the market right now, both new and used.
Don’t go rushing into a purchase just because you need to escape your current place. Move because you need to – into a rental if need be – and wait to plunk down sums of money that would buy vital organs on the black market until you find the right place.
Yeah, you have to pay GST… buy used.
Rebates be damned. Who ever remembers to Mail in those rebate forms anyways??? :)
Keep in mind also that ANY house you buy is going to have some defects, whether new or old. If you buy new at least there’s a chance some of those defects will be under warranty. But I’d agree with Miranda, you strike me as a person who would be happier in a home that had some quirk and character, which condo developments are not really known for.