Calgary’s real estate market is a dynamic landscape, offering diverse options for potential homeowners. From the charm of established neighborhoods with resale homes to the allure of customizing brand-new properties, this market caters to a wide range of preferences and needs. This blog post delves into the differences of resale vs preconstruction homes in Calgary, aiding you in making an informed decision in your home-buying journey.
Understanding Resale Homes in Calgary
A resale home in Calgary, Alberta, is a house that has been previously owned and lived in by someone else before it’s put up for sale again. Unlike new homes that are built and sold for the first time, resale homes might have been lived in for many years. When you buy a resale home, you’re buying a house with a history. This means it may have unique features or improvements made by past owners. It’s like buying a pre-loved item: it’s not brand new, but it can still be a great choice, especially if it’s well-maintained and in a neighborhood you like. Resale homes can vary a lot in style, age, and price, giving buyers plenty of options to choose from in Calgary’s diverse housing market. Let’s take a look at some of the features of buying resale properties.
Advantages of Buying a Resale Home
Resale homes in Calgary have several appealing factors:
- Established Neighborhoods: They are often located in well-established areas with mature landscapes, providing a sense of community and stability.
- Cost-Effectiveness: On a square-foot basis, resale homes are typically less expensive compared to new constructions. Additionally, the price of resale homes is negotiable, offering a potential cost advantage.
- Unique Character: These homes often ooze charm and character, with unique facades and architectural details like vaulted ceilings and built-in cabinetry, adding to their appeal.
- Convenient Move-In Dates: The negotiation process for resale homes includes the move-in date, making them more convenient for buyers with specific timelines.
Considerations for Buying Resale Homes
However, there are considerations to keep in mind:
- Maintenance and Renovation Costs: Older homes typically require more maintenance and potential renovation costs, especially if updates are needed to meet current building codes.
- Matching Older Building Materials: If you plan to renovate while maintaining the home’s character, matching older building materials can be difficult and expensive.
The Appeal of New Construction Homes
Buying a new or “pre-construction” home in Calgary means you’re getting a house that’s brand new and never lived in before. These homes are often sold before they’re fully built. It’s like ordering something that’s being made just for you. When you buy a pre-construction home, you might get to choose things like the design, colors, and sometimes even the layout, which is exciting! It’s like being part of the building process. These homes usually have modern features and the latest building materials, which can be great for energy efficiency and lower maintenance costs. Let’s take a look at the pros and cons to buying a new construction home in Calgary Alberta.
Advantages of Buying New Construction Homes
New construction homes in Calgary offer distinct advantages:
- Everything is New: This means less maintenance compared to older properties and the unique appeal of being the first occupants.
- Customization: Many builders in Calgary allow buyers to customize both the interior and exterior details of their homes, offering a personalized living experience.
- Modern Technologies and Standards: New homes are built with the latest technology and adhere to recent building codes, ensuring longer-lasting materials.
- Energy Efficiency: These homes are more energy-efficient, leading to potential savings in utility costs and a smaller environmental footprint.
- Early Bird Pricing and Incentives: Purchasing a new home early in the construction phase can lead to price advantages and possible upgrades offered by builders.
- Home Warranty: New homes in Alberta come with a mandatory 5-year warranty, providing peace of mind and protection against certain defects.
Considerations for Buying New Construction Homes
However, there are factors to consider:
- Waiting Time for Construction: The construction process can be lengthy, affecting move-in dates.
- Location: New constructions are often in developing neighborhoods, which might lack established amenities and community features.
- GST: As with most brand new item purchases, buying a new home comes with GST payments of 5% in Alberta.
Comparative Analysis: Resale vs Preconstruction Homes in Calgary
Now that you understand what resale vs preconstruction homes are, lets take a look at the financial side of things.
Cost Comparison
- Resale Homes: On a square-foot basis, resale homes are typically less expensive. The price of resale homes is negotiable, which can be advantageous unless there’s a bidding war.
- New Construction Homes: Generally, new builds are more expensive per square foot, and the price set by the builder is often non-negotiable. However, buyers can negotiate the cost of upgrades. New constructions also entail additional costs for anything above the basics, and buyers must pay GST/HST on the final sales price.
Maintenance and Upkeep
- Resale Homes: Over time, resale homes typically require more maintenance. Renovations might be needed to bring the home up to current building codes. Matching and replicating older building materials for remodels can be challenging and expensive.
- New Construction Homes: They are built to current building code standards, generally requiring less budget for annual maintenance. New homes usually come with warranties, offering coverage for defects during the warranty period.
Long-term Investment Potential
- Resale Homes: Established neighborhoods where resale homes are located may have a proven track record of appreciation. They often offer larger lots and a more cohesive sense of community, which can be attractive for long-term investments.
- New Construction Homes: While new homes in developing areas might offer uncertain future growth potential, they often come with modern amenities and are built with the latest technologies, making them appealing for some buyers. However, they might have smaller lot sizes and require time to develop strong community connections.
Additional Considerations
- Closing Costs and Financing: Closing costs for new homes can be higher as builders may pass on additional fees, whereas resale homes may have more negotiable closing costs. New home builders sometimes offer special financing incentives, while resale homes rely on traditional financing options.
- Environmental Impact: New constructions may have a higher environmental impact due to the use of new materials, whereas purchasing a resale home can be seen as more sustainable.
In summary, the choice between a resale and a new construction home in Calgary depends on various factors including budget, maintenance preferences, long-term investment potential, and lifestyle needs. Both options offer unique advantages and considerations, making it essential for buyers to assess their specific requirements and market conditions before making a decision.
Market Trends and Investment Potential in Calgary’s Real Estate
Shift in Property Types Interest
In recent years, the Calgary real estate market has witnessed a significant shift in the types of properties that buyers are interested in. There has been a move towards condos and away from detached houses. This shift reflects changing preferences and possibly the impact of affordability on buyer choices.
Market Conditions
As of the fourth quarter of 2023, the sales-to-new listings ratio in Calgary was 80%, indicating a strong seller’s market. This level suggests a market that is not just favoring sellers but might be considered overheated. Inventory has also decreased compared to previous years, standing at 1.7 months of home sales, which is lower than in both November 2022 and October 2023.
Long-Term Price Appreciation
Over the past 18 years, Calgary’s home prices have shown a healthy appreciation, with a Cumulative Annual Growth Rate (CAGR) of 5% since January 2005. This trend reflects a steady growth in the value of properties over a long period.
Comparison to Alberta’s Market
The Calgary housing market has remained relatively affordable compared to the broader Alberta market, avoiding the extreme fluctuations seen in some other regions. The benchmark price in the Calgary region has risen by 26% since January 2015, corresponding to a CAGR of 2.7%. This growth rate, while modest, suggests a stable market with limited downside risk, although there are opinions that Calgary homes might have been overpriced at the beginning of this period.
These market trends indicate a stable yet dynamic real estate environment in Calgary. The long-term appreciation rates suggest that both resale and new construction homes can be sound investments, depending on individual buyer preferences and market conditions at the time of purchase. The shift towards condos and the current seller’s market status are important factors for potential buyers to consider, particularly those looking at investment potential and market dynamics.
For more information on the forecasts for Calgary’s real estate market, check out this article here.
Making an Informed Decision: Tips for Buying Homes in Calgary’s Real Estate Market
Here are some tips that all new home buyers should know when deciding on buying in Calgary’s real estate market.
1. Saving for a Down Payment
Start saving for a down payment as early as possible. The minimum down payment in Calgary is 5% for homes under $500,000, and more for higher-priced homes. Making a down payment of less than 20% requires mortgage default insurance, which adds to the cost.
2. Utilizing Down Payment Assistance Programs
For those struggling to save enough, Calgary offers down payment assistance programs like the First-Time Home Buyers Incentive and the Attainable Homes Program, providing financial help to make homeownership more accessible.
3. Building Credit Score and Income
Ensure you have a good credit score (minimum of 600) and a stable income. This will help you qualify for better mortgage rates and terms. A higher credit score and steady employment history are crucial for mortgage approval.
4. Mortgage Affordability
Check how much mortgage you can afford using debt service ratios (GDS and TDS) and the mortgage stress test. This helps determine your maximum affordable home purchase price based on your down payment.
5. Choosing the Right Neighborhood
Consider factors like amenities, schools, public transit, and crime rates when selecting a neighborhood. Calgary offers a variety of neighborhoods, each with unique characteristics.
6. Estimating Closing Costs
Budget around 2% of the home’s purchase price for closing costs, which include real estate lawyer fees, title insurance, and registration fees.
7. Getting Mortgage Pre-Approval
Obtain a mortgage pre-approval before house hunting to understand your budget and show sellers that you are a serious buyer. Mortgage pre-approvals often come with rate holds, securing your interest rate for a specified period.
8. Working with a Real Estate Agent
A knowledgeable real estate agent can provide invaluable assistance throughout the buying process, from understanding market trends to handling paperwork.
9. House Hunting Considerations
Evaluate factors beyond the house itself, such as commute, public transport connections, potential renovation needs, and nearby schools. Narrow down your choices and conduct home inspections to assess the condition and value of the properties.
10. Closing the Deal
Finalize your home purchase by signing documents, paying closing costs, and arranging down payment through your real estate lawyer.
These steps provide a comprehensive guide to navigate the Calgary real estate market, ensuring a well-informed and strategic approach to home buying. Whether you’re considering a resale or a new construction home, these tips will help you make a decision that suits your needs and financial situation.
Ready to explore the exciting world of home buying in Calgary, Alberta? Our team of expert realtors is here to guide you every step of the way! Whether you’re interested in a charming resale home with character or a sleek, custom-built new home, we have the knowledge and experience to help you find your perfect match. Don’t miss out on the opportunity to make your dream home a reality. Contact us today to start your journey towards homeownership in the vibrant city of Calgary. We’re excited to work with you and turn your home buying aspirations into a successful reality!
Q: What are the advantages of buying a new construction home?
A: New construction homes offer modern amenities, energy efficiency, customization options, and often come with warranties on major components, providing peace of mind to the buyers.
Q: What should I consider when buying a new home vs resale properties?
A: When deciding between new construction and resale homes, consider factors such as your budget, timeline, desired location, customization preferences, and the condition of the property.
Q: How does buying a new construction home differ from purchasing a resale property?
A: Buying a new construction home involves working with builders, selecting floor plans, and customizing features, while purchasing a resale property typically involves negotiating with a seller and possibly making renovations or upgrades.
Q: What are the benefits of buying a single-family home?
A: Single-family homes offer privacy, yard space, and the freedom to personalize and make structural changes, providing a sense of ownership and individuality for the homeowners.
Q: How can a realtor® assist in buying a new construction home?
A: A realtor® can help buyers navigate the new construction home buying process, provide market insights, negotiate on behalf of the buyer, and assist in understanding builder contracts and warranties.
Q: What are the considerations for energy efficiency in newly constructed homes?
A: Newly constructed homes often feature modern energy-efficient appliances, insulation, and HVAC systems, which can lead to lower utility costs and a reduced environmental impact.
Q: Are there additional costs associated with buying a brand new construction home?
A: New construction homes may have additional costs such as upgrades, landscaping, and HOA fees, so it’s important for buyers to carefully review the pricing structure and understand all associated expenses.
Q: What are the key differences between pre-construction and resale homes?
A: Pre-construction homes are not yet built, allowing for customization and longer lead times, while resale homes are immediately available with established features and may require renovation or maintenance.
Q: How does the resale market compare to buying a home in Calgary?
A: The resale market in Calgary offers a variety of existing homes with established neighborhoods and amenities, while buying a new construction home in Calgary provides opportunities for modern designs and customizations.
Q: Why is it important to work with an experienced real estate agent when considering a new home purchase?
A: An experienced real estate agent can assist buyers in understanding the local market trends, advocate for their interests during negotiations, and provide valuable guidance in making informed decisions when purchasing a new home.
