Buying a new home? Experts offer some tips to help avoid hiccups
A newly constructed home offers many benefits, not the least of which is presumably the owners are starting with a clean slate.
Indeed, more Albertans are buying new amid high demand for housing and a shortage of resale homes on the market. Canada Mortgage and Housing Corp. statistics from February show the average price of a new single-family detached home in Calgary was about $758,000, up about 10 per cent year over year. In Edmonton, the price was about $607,900, up roughly $100, essentially flat year over year.
Still, sales for all types of new homes, including apartment condominiums, in Edmonton were up nearly 11 per cent year to date (ending Feb. 29) with 1,086 absorptions. Calgary saw 1,800 absorptions year to date, up more than 28 per cent.
If you're considering buying a newly constructed home, here are a few tips to help avoid any unforeseen hiccups in the process.
TIME WALK-THROUGHS
Most builders allow walkthroughs at various stages of construction. Mortgage broker Marc Crossman suggests asking those to be scheduled for specific times, particularly for elements in the home that will be covered up upon completion. This is helpful for items like additional soundproofing in walls, and waterproof membranes in bathrooms, says the managing partner with Alberta Mortgage Professionals.
“Once these things get covered up with drywall or tile, you don't actually know you've gotten what you have paid for.”
Crossman speaks from experience, noting that water damage occurred in his new home due to the main bathroom having no membrane, even though it was supposed to be installed.
PRICE ESCALATION
Escalation clauses are becoming more commonplace among builders in the province amid fast-rising costs for labour and materials, and resulting construction delays. Yet it's best if you can get a purchase contract without one, says Nevin Jones, realtor with Re/max Complete Realty in Calgary.
“If you are going to buy new, you want to make sure the agreed-upon price is fixed,” he says.
Otherwise, you risk getting through most of the home's construction only to find out the price is tens of thousands of dollars more than expected. That's an outcome Jones — who works with clients buying new homes — says he has seen a few times over the past year.
HIRE A HOME INSPECTOR
Inspectors are commonly hired by buyers purchasing resale homes, but Crossman suggests it is worth doing for a newly built home, too.
But hire an inspector to do the study after you have been living in the home for at least six months. Do not wait longer than nine months, however, to do the inspection. That way, your builder has plenty of time to examine the report if the inspector finds problems before the one-year warranty ends for defects related to materials and labour, he adds.
LOCATION MATTERS… MORE THAN YOU MAY REALIZE
When choosing your new home's lot, consider the adjacent land zoning, especially with respect to commercial and multi-family residential use.
“Those zonings can change,” Crossman cautions. For example, if adjacent land is zoned for low-rise multi-family, be aware that could change at some point to zoning for a highrise development, so “one day, you could potentially end up with a 10-storey building overlooking your backyard.”
The ideal is having lots adjacent to your home zoned for similar housing types, he adds. “Otherwise, just be cognizant that zoning may change, and it's usually zoned to something you won't be all that happy about.”