The dream of building a new or completely custom home is alive and well, partly thanks to the housing shortage we are facing all over the province, especially in the GTA. It can be easy to lose yourself in the dream when thinking about all of the benefits of brand-new construction.
However, there are also some considerations that you don’t want to overlook. In this post, we’ll discuss some of the advantages, disadvantages, and hidden costs of building so you can make an informed decision.
Your Custom Home: Built to Order
The idea of a custom home is endlessly appealing. Your house is perfectly designed to your exact needs and specifications. And no one on the block has the same design as you. Yours is one-of-a-kind, and no one can imitate it.
As much as your heart swells with pride every time your beautiful house comes into view, it is about so much more than outside appearances.
Everything in your home is new and full of the latest technological advancements. Smart thermostats and a high-efficiency HVAC and electrical system ensure your absolute comfort, day and night. You may even splurge on heated floors and other luxuries.
The Financial Aspects of Custom Builds Vs Resale Homes
Looking at the price of a house in Toronto can leave you with sticker shock, particularly as the average cost has reached over $1 million. By comparison, purchasing a vacant lot can seem like a bargain.
However, it is possible that your beautiful custom home will end up costing more once all is said and done.
Purchasing land, hiring contractors and the architect, and materials are all part of your expected costs. You will also have to factor in getting permits, developmental fees, and land transfer taxes. And when building from scratch, you must also prepare for the unexpected. Here are just a few things that can and do arise:
- You will need to select an architect, engineers, and contractors and work with them directly. If you have never built a home from scratch before, the process can be more complicated than you bargained for.
- The outcome isn’t always predictable: Factors like weather conditions or regulation changes can affect the result when building a custom home. Variances in the final outcome can happen, no matter how meticulously you plan. Realistic expectations are necessary because there is no such thing as “perfect” when it comes to construction.
- Building takes time: Even if everything goes according to plan, it could be months before you move into your new home.
- The potential for higher maintenance costs: On paper, your costs should be lower since all systems are brand new. However, custom-built homes often incorporate unique features or specialized materials that may require more maintenance and attention.
- Resale value may be limited: The beauty of a custom-built home is that it’s designed just for you. The bad news? Other potential buyers may not see the value, which could result in a lower price should you ever decide to move on.
Where to Build a Custom Home
If you decide to proceed with building a custom home, you will soon face a new challenge. There may be miles and miles of untouched land as far as your eye can see. However, much of it is under government protection and not for sale. Securing an ideal lot to build on in the city is one of the most difficult challenges for construction.
Opportunities for custom-built homes are limited in the city but become more plentiful in rural areas. To find out more, read “Your Guide To Rural Living Near The GTA.”
Pre-Construction Vs Custom: What’s the Difference?
If constructing a custom-designed home isn’t feasible, buying a pre-construction house or condo might be an excellent alternative. What’s the difference? Instead of designing and building from a blank canvas, you choose an existing floor plan from the builder. While it’s not quite the same as a fully customized home, there are several advantages:
- Buying pre-construction will likely be less expensive, with less room for mistakes and miscommunications.
- You can still personalize your home by selecting your upgrades.
- Want to stay in the city? The GTA has many new homes and condos in the works, giving you plenty of sites to choose from.
- The wait may be shorter since you can buy during any stage of the building process.
- You’ll have a brand new, never-lived-in home with a 10-year Tarion warranty against builder defects.
Finding your next home can be challenging in this changing market, but the resources below will help you along the way:
What to Consider Before Buying Pre-Construction
Buying pre-construction will almost certainly cost less than a custom home. However, it can still be more expensive than buying an older, resale house. And not all of the drawbacks are financial. Think of what makes a house a home to most people.
A big part of it isn’t the building itself but the location. Older areas can have a character and sense of history a new build can’t compare with. Lavish greenery and tall mature trees often adorn the streets of these well-established neighbourhoods. When investing in a pre-construction home or condo, it takes time for the community to grow and flourish, and there is no way to speed up that process.
Here are a few other factors to consider before investing in a pre-construction unit:
- Occupancy fees: Also known as “phantom rent,” many builders charge occupancy fees once you move into your unit and before the final closing date. This cost is approximately the equivalent of one year’s interest on the unpaid balance of the purchase price.
- HST on new builds: Unlike resale homes, new construction is subject to HST. You may be eligible for a rebate of up to 75% to a maximum of $24,000. However, you may forfeit this rebate if you rent during your occupancy period.
- The hidden costs of delays: Even with the most reputable builders, delays can happen, and they are far more than inconvenient. They have a very real cost, including legal fees, mortgage rate fluctuations, and missed opportunity costs if you are forced to wait to sell your existing home. If your sale has already been finalized, you may also have to pay for temporary accommodations until your project is completed.
- Complications when selling: If your life changes between now and your possession date, you may need to sell your unit before it’s completed. This is also known as an assignment sale, and it can get complicated. Plus, you will need permission from the builder to sell, which they may refuse if they have inventory remaining.
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Taking the Next Step
If you decide to proceed either with building a custom home or buying pre-construction, you are in for a whirlwind of excitement and adventure at each stage in the construction period. Any setbacks will be quickly forgotten once you step foot in your beautiful new home for the first time!
Do you have further questions about newly constructed homes or buying a resale property? I have extensive experience in both options and am happy to guide you to the best path. Give me a call or text today at 289-536-4143 or email firstname.lastname@example.org to start the conversation.
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