Real Estate

Home Purchase During Covid

  • Last Updated:
  • Jun 3rd, 2020 7:11 am
[OP]
Newbie
May 21, 2020
31 posts
2 upvotes

Home Purchase During Covid

Looking to buy a preconstruction or resale in Oakville for growing family. Would you wait it out to see if prices will drop?

In the case for a preconstruction, the builder is of course unwilling to lower their price...given market conditions would it be unrealistic to assume they might offer more incentives and credits? Builder has quite a few unsold lots which they said they are releasing on a case-by-case basis.
13 replies
Newbie
May 29, 2020
13 posts
8 upvotes
I wouldn't hold my breath on a pre-con... Builders have deeper pockets than individual sellers. If you want a deal, now is a great time to look at the resale market (tons of listings are sitting on the market after multiple price reductions). Are you looking at detached houses? I've been watching that market like a hawk and the balance of power has shifted completely from seller to buyer.
Toronto Realtor
[OP]
Newbie
May 21, 2020
31 posts
2 upvotes
Hi there,

Yes, I am looking for a detached home.

I wonder if it makes sense to wait several months to see if prices drop even more? Obviously no one knows. If prices drop I don’t want to face bidding wars with buyers whom are also waiting on the sidelines. I’ve read bidding wars are happening now, which isn’t entirely a surprise given the limited supply (I am also aware sellers are listing below market).
Deal Guru
Feb 29, 2008
13852 posts
10095 upvotes
Builders may drop prices but likely not. Usually they just add a bunch of incentives. You can certainly negotiate and see what you can get....Just remember, most builders don't like to budge on price because if they do, it alienates those who bought previously. So the builder just starts throwing in finished basements, $50K towards upgrades, etc. They have enough $ to wait out the pandemic. Some builders will have empty houses for years and not drop price.
[OP]
Newbie
May 21, 2020
31 posts
2 upvotes
Yes, good point! If I go down the preconstruction route I’ll try to negotiate for more incentives. I have been told builders will typically offer upgrade credits. But with their markup these credits get you what, a few potlights?

Can anyone share their experience purchasing a preconstruction detached home? Aside from the obvious pitfalls including delays, etc...
Deal Addict
Nov 13, 2013
2412 posts
1189 upvotes
Ottawa
SARAHLEEK wrote: Hi there,

Yes, I am looking for a detached home.

I wonder if it makes sense to wait several months to see if prices drop even more? Obviously no one knows. If prices drop I don’t want to face bidding wars with buyers whom are also waiting on the sidelines. I’ve read bidding wars are happening now, which isn’t entirely a surprise given the limited supply (I am also aware sellers are listing below market).
I tend to think prices will drop more as the economic damage looks to be more long-lasting. But it's far from obvious that will happen. If you are talking about your primary residence and you find a house you can afford you like I don't see a reason not to go ahead. Timing any market is difficult. I certainly wouldn't be buying pre-con as an investment right now as the down side is bigger than the upside but for your medium to long term home I don't see a reason to wait.
Jr. Member
Oct 26, 2009
173 posts
47 upvotes
EDMONTON
SARAHLEEK wrote: Yes, good point! If I go down the preconstruction route I’ll try to negotiate for more incentives. I have been told builders will typically offer upgrade credits. But with their markup these credits get you what, a few potlights?

Can anyone share their experience purchasing a preconstruction detached home? Aside from the obvious pitfalls including delays, etc...
Which builder are you looking to purchase with in Oakville area?
[OP]
Newbie
May 21, 2020
31 posts
2 upvotes
Menkes.

I was only familiar with their condos/office buildings. That being said, I don’t know the quality of their service and workmanship. I had some email correspondence with them. A friend is considering purchasing in that development and advised that half the lots have been sold (release was late last year). Not surprising given the uncertainty in the market and recent closures due to covid.

Just a year ago people were waiting hours in line to purchase a preconstruction. Ultimately I’m hoping to start a family soon and would like a long-term home.
Deal Guru
Feb 29, 2008
13852 posts
10095 upvotes
Wouldn’t worry about Menkes. Good builder.
Sr. Member
Dec 19, 2010
817 posts
270 upvotes
SARAHLEEK wrote: Can anyone share their experience purchasing a preconstruction detached home? Aside from the obvious pitfalls including delays, etc...
We bought a pre-con in Oakville in late Jan with closing late Nov. Remington Homes is the builder. The lot we purchased had come down substantially from 18-24 months back when most builders had prices higher higher than the resale market. At the price we got, I feel we were at or slightly below resale for the neighborhood, size of home etc. The lot we got was the last one they were selling in a mostly developed area so the builder was more motivated to sell; were able to negotiate a bit on the price and get additional incentive design credit included. While the builder markup is high, I would estimate the credit is worth 50% in real $ but we were still able to apply it to upgrades we wanted at the structural meeting and used most of it up.

We had our structural meeting in March and the design meeting that was booked for mid April got cancelled, we are still waiting for this to get booked but I expect it will be soon. We did get an email from the builder in April advising the closing date may get extended but the builder insists they will close on time. Strange thing is they haven’t even begun excavating yet so will wait and see. Technically they have until late August (90 days prior to closing) to advise us of a delay.

Overall-
- buying precon allowed us to get new, higher ceilings that we wanted etc and if it’s a primary home for the long term I don’t think the price should matter too much provided you can afford it. With that said, there are some good deals to be had in the resale market. I think Oakville resale prices for detached homes has come down slightly, I’m seeing more homes sell for below list price whereas just in Feb the selling price was often higher than list.
- With precon you have to be prepared that the builder dictates the terms and the purchase contract is heavily skewed in their favor eg they can move closing dates up to a year and a half (with after 6 months there is a small penalty to the builder but hardly material), you can’t move the date.
- Their design centers and upgrades are beautiful and you will pay through the nose for the convenience of it all being ready when you take possession of the home (ie inflated builder prices).

Good luck and happy hunting, Oakville is a beautiful town to raise a family.
[OP]
Newbie
May 21, 2020
31 posts
2 upvotes
Congrats on your new home purchase! And thank you very much for sharing your insight.

Unfortunately I don’t think Menkes will budge on the price. Despite only selling half of the lots, I expect the builder is willing to just let them sit. As for upgrade credits, thanks for validating my expectation. It’s no surprise why they won’t release upgrade options/price lists until after you sign the purchase agreement. I assume this was your experience as well? Are you not privy to this information until your design appointment?

There is more appeal in buying a new build, but it’s hard to stomach the cost of upgrades. From your experience would you recommend holding off on certain upgrades until after close, and hiring your own contractors? I know it would be a hassle and you may prefer to pay a premium and move in with everything completed. I also don’t know what would void the Tarion warranty? Do pot lights really cost +$250 through builders? lol

With 99% of the resale homes I’ve entertained, I would likely complete renovations...either way there are pros and cons to preconstruction and resale.
Sr. Member
Dec 19, 2010
817 posts
270 upvotes
SARAHLEEK wrote: Unfortunately I don’t think Menkes will budge on the price. Despite only selling half of the lots, I expect the builder is willing to just let them sit. As for upgrade credits, thanks for validating my expectation. It’s no surprise why they won’t release upgrade options/price lists until after you sign the purchase agreement. I assume this was your experience as well? Are you not privy to this information until your design appointment?

There is more appeal in buying a new build, but it’s hard to stomach the cost of upgrades. From your experience would you recommend holding off on certain upgrades until after close, and hiring your own contractors? I know it would be a hassle and you may prefer to pay a premium and move in with everything completed. I also don’t know what would void the Tarion warranty? Do pot lights really cost +$250 through builders? lol

With 99% of the resale homes I’ve entertained, I would likely complete renovations...either way there are pros and cons to preconstruction and resale.
Ah the dreaded upgrade price list, I tried to suppress these memories lol! We have bought through Mattamy before and they were up front about cost of upgrades although this was a few years back and it may not have been at time of sale. But pricing was standardized and provided well ahead of our design meeting. Remington has been more grey, they didn’t share any pricing on upgrades except to say “oh sure we can do that, you’ll find out at the design meeting”. It wasn’t a good experience but I hear that’s how most builders operate, it’s in their interest to hold back the information.

In our case we negotiated about $25K in upgrade credit. It seemed like a lot initially but you can easily go through it. We decided to get the upgrades that were structural in nature and couldn’t be done by contractors or a hassle to do later: so removing bulkheads in kitchen or washrooms (where otherwise the builder would have ducts or plumbing runs), smooth ceiling instead of popcorn, changing tubs to standing showers, deleting the bullnose on stairs etc. we will probably go through a number of design choices through the builder as well due simply to the convenience (kitchen, countertop upgrades, etc and there are still some upgrades we will do later after we move in, eg waffle ceilings, extra interior Potlights and exterior Potlights). All said, be prepared to add $50-100k easily to your final purchase price.

We looked at resale homes for a few months before settling on a new build. We loved the larger lots in the older homes, privacy, more mature neighborhoods, but the inside more often that not let us down- old bathrooms, low ceilings, lived in feeling etc. Now there were many that were kept very well and had gorgeous backyards and upgrades but some things like ceiling heights or just generally old style/layout we couldn’t get over. We reasoned that we spend far more time inside the home and would rather have brand new and enjoy it for the next 10-15 years than be in constant reno mode with an older home.
[OP]
Newbie
May 21, 2020
31 posts
2 upvotes
callmebob wrote: Ah the dreaded upgrade price list, I tried to suppress these memories lol! We have bought through Mattamy before and they were up front about cost of upgrades although this was a few years back and it may not have been at time of sale. But pricing was standardized and provided well ahead of our design meeting. Remington has been more grey, they didn’t share any pricing on upgrades except to say “oh sure we can do that, you’ll find out at the design meeting”. It wasn’t a good experience but I hear that’s how most builders operate, it’s in their interest to hold back the information.

In our case we negotiated about $25K in upgrade credit. It seemed like a lot initially but you can easily go through it. We decided to get the upgrades that were structural in nature and couldn’t be done by contractors or a hassle to do later: so removing bulkheads in kitchen or washrooms (where otherwise the builder would have ducts or plumbing runs), smooth ceiling instead of popcorn, changing tubs to standing showers, deleting the bullnose on stairs etc. we will probably go through a number of design choices through the builder as well due simply to the convenience (kitchen, countertop upgrades, etc and there are still some upgrades we will do later after we move in, eg waffle ceilings, extra interior Potlights and exterior Potlights). All said, be prepared to add $50-100k easily to your final purchase price.

We looked at resale homes for a few months before settling on a new build. We loved the larger lots in the older homes, privacy, more mature neighborhoods, but the inside more often that not let us down- old bathrooms, low ceilings, lived in feeling etc. Now there were many that were kept very well and had gorgeous backyards and upgrades but some things like ceiling heights or just generally old style/layout we couldn’t get over. We reasoned that we spend far more time inside the home and would rather have brand new and enjoy it for the next 10-15 years than be in constant reno mode with an older home.
We share the exact same sentiments!!

When the time comes I’ll be sure to ask you for contractor referrals. I can’t justify paying +$300 per potlight lol
Deal Guru
Feb 29, 2008
13852 posts
10095 upvotes
Same boat. I will be doing pot lights along with many other upgrades afterwards. Home builders give terrible standard finishes so you have to pay for upgrades. Very different from condo builders that give good standard finishes.

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