• Case Study: Do We Buy Resale or Pre-Construction?

  • Every year thousands of new immigrants arrive in Canada and more than half of those end up immigrating to Toronto. With property prices where they are, many people cannot afford to buy resale and therefore end up looking at the pre-construction opportunities, of which there are many in this growing city.

    My current clients are Canadians but were living in Kuwait for the last 17 years. There two oldest have since come back for University and their youngest will be going to high school next year. They arrived in Toronto 6 months ago and the wife recently found work but the husband is still looking for work in a highly competitive marketplace.


    We met up at a pre-construction condo event last week, which was being touted at Platinum prices (next stage beyond friends & family). They wanted to run the numbers to see which would be more affordable for them – a resale two-bed condo they found at 1200 sq feet with parking but no storage locker or a two-bed pre-construction condo at 765 sq feet that would cost extra for parking and storage.

    For me it’s a no brainer but it comes down to down-payment and what they can afford today vs later when the pre-construction is completed, which is January 2020 so just shy of 3 years.

    Let’s assume a purchase price of $450,000 for both as that is what they have been qualified for with 20% down.


    Purchase Price $450,000 $450,000
    Deposit 0 n/a $3,000 Initial deposit
    Downpayment $90,000 20% down $19,500$22,500$22,500


    Balance in 30 days5% DP in 90 days5% DP in Sept 2017

    5% on occupancy

    Parking 0 Included $24,999 Per parking space
    Locker 0 included $5,000 Per locker
    Dev’t Charges 0 n/a $10,000 This particular condo
    Maintenance Fees $456 Per month $397.80 Based on 765 sqft * .52/sqft
    Property Taxes $3,156 Per annum $4,500 1% fee estimated
    TOTAL  $94,500 $134,896.80


    Closing Costs are approximately $4,425 after rebates for both Ontario and Toronto Land Transfer Taxes.

    When we sat down to look at the numbers, my clients were surprised at the difference in cost between resale or pre-construction.   For instance purchasing resale with the parking and locker included, is a huge savings. There are also no development levees or charges, which are not in your control with pre-construction as you don’t know what can happen during the building of the condo.

    My clients’ really wanted to purchase a home and not a condo but on a single-family income, they did not have much choice.

    They had much to consider, such as:

    • Once the husband found a job they would be able to afford more – thus buying today would limit that choice down the line and perhaps impact their ability to afford a home;
    • They were not keen on paying extra for parking and locker and/or waiting 3 years to become home-owners as they felt that they were wasting money each month on rent;
    • They had a limited down payment but with time they could save more and buy the house they wanted rather than settle for a condo they did not want- they were thinking future and not now.

    Are you considering a purchase between resale and pre-construction? Do the numbers based on your present circumstances. It will help you figure out the best strategy for you!

    Want some help running your numbers? Please contact me at 416 697-5443 or [email protected]  so I can help you figure out the best way to proceed