In Canada’s fast-paced real estate market, buying a home can involve multiple in-person showings and many rounds of offer negotiation, plus several years of saving for a sizable down payment. These hurdles can make it difficult for some buyers to get a foot on the property ladder, especially in today’s low-inventory, high-interest-rate environment.
Some Canadian homebuyers prefer an alternative approach to purchasing real estate that forgoes the conventional challenges of resale transactions, opting to purchase their home pre-construction. Pre-construction, a popular choice for investors, is also an option for end-user homebuyers who prefer to buy brand new and have the luxury of time to wait to move into their home.
Buyers who purchase a pre-construction property and plan to live in it upon completion have remained a consistent buyer demographic in the Canadian pre-sale segment over the past few years. In fact, end users are currently the most active type of buyer in the pre-sale market, according to a recent Royal LePage survey1 of real estate professionals across the country who conduct 25% or more of their business in the pre-construction segment. This is unchanged from pre-pandemic times when end users were the most common pre-construction buyer type.
Buying a pre-construction home offers a unique advantage for first-time buyers. Unlike resale transactions, where the full down payment is required upfront, pre-sale deposits are broken down into multiple installments that are paid to the developer over a period of time, often across a few years. For first-time buyers who don’t have a full 20 per cent down payment saved, this structure allows them more time to save while still securing a contract for a home. In the current market, where interest rates are at a 22-year high, closing on your home at a later date also allows for borrowing costs to potentially come down by the time a mortgage is required.
Are you thinking about buying a pre-construction home? We checked in with two Royal LePage experts who specialize in pre-construction properties to provide insights into this segment of the Canadian real estate market.
Read the full report
here.
