As housing prices continue to rise and buyers struggle to find affordable real estate, the question of why new condos are more expensive than resale often comes up. It’s a valid concern that deserves an answer.
In this article, we will explore the reasons why new condos are typically more costly than their resale counterparts. We will look at factors such as construction costs, location, and amenities, among others, to understand why there is such a difference in price.
They are in Brand New Condition
Well, the first and the most obvious reason is that new condos are brand new. They are not as old as resale units, which have already been inhabited by one or more owners. If you are going to buy a brand new condo then it is obvious that you will have to spend more over a resale unit.
The condo will be in perfect condition and the furniture and appliances will be most probably brand new as well. You are getting a brand new condo with all the features that you want. You don’t have to go through the hassle of fixing the problems that might already be present in a resale unit.
New Condos are Equipped with the Latest Features
Most of the new condos come equipped with cutting edge technology that adds convenience and luxury to the living experience. From smart thermostats that adjust temperatures according to personal preferences, to digital locks for enhanced security, these new developments are far more advanced than what can be found in a resale property.
It is no brainer that a good new condo will always be equipped with the latest in technology while the resale unit might be several years old and not as technologically advanced. These features will result in a better living environment for most of the condo owners but it will also mean a higher upfront cost and higher maintenance fees due to the higher cost of running the facilities.
More Updated Infrastructure Including Design
Not only do new condos come with the latest in technology but the infrastructure itself is also more updated. This includes new designs and advanced building materials that are not necessarily offered in resale units. The design of the condo itself is usually fresh as well, giving you the feeling of living in a modern space.
You won’t feel like you’re living in an old building, so if this is important to you, you should consider buying a new condo. Updating a resale condo to match your needs can be expensive and time consuming. If you are looking for a condo that is ready for you to move in and enjoy, then you should probably consider a new condo instead.
Equipped with the Latest in Facilities and Amenities
New developments come with the most up to date features and amenities, which includes state of the art fitness centers, swimming pools, golf area and children area, etc. These cost a lot of money to install, so naturally new developments will have higher price points. In a resale unit you might get some of these amenities but they will not be as advanced.
These facilities are the most popular selling points for new condos and are also one of the biggest factors adding to the cost of a new condo. The most important question to ask yourself is, if you are paying a premium for buying a new condo is if you really want the latest and the most modern amenities or can you compromise with something slightly older, saving you thousands of maybe hundreds of thousands of dollars.
Rising Cost of Construction Materials
One of the biggest contributors to the cost of new condos is rising material costs. Inflation is the biggest culprit here. The average inflation rate in Canada is about 2-4% per year, meaning that the cost of materials is increasing by 2-4% per year. For example, if a decade ago the cost of building a condo was $500,000, today it would be over $636,589.
This is a significant increase for a decade. Now, we are not saying that everything is going to cost you way too much, but the fact that inflation exists in the world means that you have to expect prices of every real estate property to shoot up over time.
Increased Labor Costs
Another effect of inflation is increased labor costs. The construction companies have to pay more money to the workers and they pass the cost on to you. There are two reasons why labor costs go up. One is that there is an increased demand for workers, which makes them more expensive. The other reason is that workers may have gained experience and become better at their jobs.
Most construction companies tend to pay more for higher-skilled workers. But ultimately when you buy a new condo unit you will have to bear the cost of increased labor costs. It is not just construction that gets affected by inflation. Every sector of the economy will be affected by inflation and it will have an impact on your life.