This is often a topic of concern. I’ve heard many people state that condo values do not go up because condominiums are commodities. It’s not that simple. The same rules apply to single family homes. LOCATION. LOCATION. LOCATION. Got that?
The Value of New and Choice
I’ve found that a lot of people really value the newness of new construction. They love choosing their finishes and living in a unit that no one else has lived in. You have the opportunity to pick the best view, floor plan and all of your finishes.
The Developer Needs You
Those first few buyers can often negotiate a bit more than later buyers. The developers typically need to presell a certain percentage of units (70%) to get financing for the project. While they are not inclined to reduce prices in a good market, they are often happy to give you some upgrades just to book the sales. They know that the first few are the hardest to sell, once they have sold a good percentage of them other buyers will hop on the train and buy too.
Lock in Pricing
In an upward moving market, you are purchasing tomorrow at the market price today. I’ll gladly pay you for a condo tomorrow.
Discounted HOA Assesments
If you aren’t there that long, this may be a good thing. The developer wants to sell unit and is not worried about putting the funds away today for problems that may develop 20 years from now. HOA payments will increase with time. They always do. Expect them to increase at the rate of inflation. It’s just good planning.
Many cities including Cincinnati offer generous tax abatements for new construction. 10 to 15 years at reduced prices. Leed Certified is the best but any tax abatement can save you a lot of money over the years.
Construction Noise & Mess
New construction can go on for years. Are you ready to live with the noise, dust and construction workers? Think about this if you are retired and home all day or if you work from home.
Who Controls the Building?
New construction is more complexity. How long will it take and when will the homeowners get control from the developer. The goal is for the homeowners association to run the building, but all new buildings are run by the developer until certain milestones have been met by the developer.
New Construction has More Complexity
How long will it take and when will the homeowners get control from the developer. Will it sell out or will it maintain it’s pricing? Will the developer have the financial wherewithal to complete the project? Low inventory today means less to worry about but that wasn’t always the case.
Reasons to Buy a Resale Condo
Location and View
Often the best locations and views are the older buildings. Most cities were developed a long time ago and people still want to be near downtown or to have views of water and minutes. River view and ocean view condos were usually built long ago. Park views are also sought after and the more established a park is the more expensive homes near it. There are always exceptions to this especially in newly revitalized cities.
Resales may have dated interiors or are being sold under a bit of distress. People get old and move to assisted living and sometimes their families are left to sell the units and aren’t as emotional as the owner. If you are willing to renovate, you can often get a very good deal and a good view.
The Community is Already Established
Once the building has been inhabited for a while, the community is established. They have institutional knowledge, a board and management with knowledge of the building. It can take a while to establish boards and processes. In a resale you can tell if the building is a quiet building made up of retirees and professionals or a rowdy building with young professionals and students. Some buildings are more social than others. It’s helpful to know which type of community you are seeking.
New construction for the most part tend to be smaller units with higher SF costs. The exception is the luxury market. In Cincinnati, many of the new construction seem to be either 3,000 plus SF and over $1 million dollars or 1,000 SF and $300,000-400,000. Developers need to make money and are making smaller and smaller condos. Micro condos and one bedroom condos are becoming more prevelant.
Better Quality Building
Older buildings are often built better. Older condos were often made of better materials by better craftsman. Some new buildings can be pretty but not so well made. Take the time to learn about the developer. I’ve known more than one buyer who bought new construction only to find out that they can hear the neighbors walking above them. Consider a newly developed older building for the best of both worlds.