Are you thinking about selling your condo? Now might be the right market-but does that mean it’s the right time for you to sell?
If you bought a condo in Toronto between four and five years ago, you may be thinking it’s a good time to sell. Toronto condo prices, according to the Condos.ca PSF Index, are on the rise: since February of 2017, the average 800-square-foot condo has appreciated by approximately $78,000, and condos that were purchased in 2012 have increased in value by close to $130,000. But does this increasing market mean condo owners should wait until prices climb even higher or sell now?
To Sell or Not to Sell…
As the PSF Index indicates, it’s a good time to sell. The increase in value of your condo means that, if you sell now, you can invest those higher profits into purchasing a new property, allowing you to continue to grow your equity. If that’s your plan, then selling now is smart because it will allow you to enjoy the climbing value of your new property as well. A lot of condo owners are hesitating to sell right now because those values do continue to rise-they could earn a higher resale value by waiting another year to sell-however, it’s important to remember that the rest of the condo market is appreciating in value, too. A year from now, you’ll be facing higher asking prices than you’d be facing today, and that may make your investment less profitable in the long run.
Then, of course, there are those looming price corrections. If the real estate market is experiencing tremendous growth now, is that simply leading to a drop? Price drops are difficult to predict; however, it is also important to remember that high growth leading up to a decrease softens the impact of the decrease (if you earn 15 per cent in market increases leading up to a 10 per cent decrease, you’re still up 5%), which means that, based on Toronto’s high rate of condo market growth (particularly in Toronto’s core), it isn’t very likely for prices to fall below what you initially pay.
The Pros and Cons of Choosing a New Condo
We’ve established that now is a good time to buy, but that doesn’t help you figure out what you should buy. New condo or resale condominium-which is the better investment for you? Here are a few pros and cons of each option.
Pros of Buying a New Condominium:
· Lower purchase price (depending upon market conditions).
· Better choice of locations within the building (if applicable).
· Broader range of options and/or upgrades.
· Less risk of having to undergo costly and intrusive repairs and renovations.
· New home warranty protection.
Cons of Buying a New Condominium:
· You may have to rely on artist sketches and floor plans to get an idea of the finished product before you buy. If this is the case, make sure the unit’s boundaries, location, finishes, materials, chattels, etc. are clearly specified in the purchase agreement.
· You pay your deposit before you move in, which means it may be tied up throughout