RESALE VS. NEW CONSTRUCTION: FIVE QUESTIONS TO HELP YOU DECIDE

By Barbara Laken and Annie Alexander

It’s hard to miss the citywide boom in new construction condos. From shimmering glass high rises in the Gold Coast and River North to Jeanne Gang’s Vista Tower, which grossed over 200 million dollars in sales before breaking ground, new construction condos are dominating the market in many Chicago neighborhoods. This trend has left many buyers torn between the clean lines of modern architecture and charm of established neighborhoods. Which one is right for you? For most buyers the decision isn’t easy, or obvious, because the answer picots not only on dollars and cents – but also on lifestyle.

We’ve found that buyers debating whether to invest in resale or new construction find it easier to make the right decision by asking themselves the following questions:

How Important is Location to You?

Many new buildings and developments coming on line in 2016/2017 are located in newly created communities like Lakeside East, where local business and transit systems have not yet been fully developed. Others are situated in former commercial zones, on busy streets and intersections, where a sense of neighborhood is hard to develop, if it can be developed at all.

The established infrastructure of older neighborhoods usually provides better walkability to neighborhood stores, schools, community centers and places of worship – in addition to easier access to urban transit. And because neighborhood culture has been established slowly over time, residents in older neighborhoods generally feel more connected to the larger community around them.

Are You Particular About the Purchase Price?

On a square-foot basis, resale homes are typically less expensive, with negotiable prices. Most resales also have bigger rooms, offer more square footage overall and are more likely to include items that may cost extra with new construction, like window treatments, built-ins, etc. New construction is almost always more expensive per square foot, with a price set by the developer that’s usually non-negotiable.

Is the Cost of Upkeep a Concern?

It’s likely that you’ll spend more on the maintenance of a resale property due to the eventual need to replace or repair integral home components as they age out and require service. And renovation and remodel costs, if needed, can easily exceed contractor proposals. These disadvantages are mitigated by the property tax rate on resales, which is often substantially lower than the tax rate on new construction.

While you probably won’t need to budget quite as much for annual maintenance and upkeep on your new construction condo, there’s no guarantee that pricey and unforeseen maintenance issues won’t arise in newly built structures. For instance, one of the newest and most expensive new construction condos in the city has already had two special assessments.

Are You Flexible About Your Move-In Date?

The advantage of buying a resale home is that every factor is part of the negotiation, including the date for move-in. For this reason, resale purchases are often more convenient for people with specific move-in timelines.

While builders will give projected completion dates, many don’t meet their construction schedule. Don’t be surprised if the move-in date for your new construction condo is substantially delayed.

What Kind of Neighbors do You Want?

Most buyers fail to consider one of the most crucial elements of any property purchase: what kind of people are likely to live next door? Because any real estate purchase is fixed to a specific geographic location, make sure you do your homework as to who you desire for neighbors.

Older neighborhoods, where resale homes and condos are generally found, usually offer a mixed bag of residents ranging from young families to retirees. Condo association rules can give the buyer an aperture into the type of people who live in a place. Are they overly restrictive, or not restrictive enough? Both of these styles of governance can impact a buyer’s overall satisfaction in their new home and the safety of their investment.

In contrast to the polyglot nature of more established neighborhoods and residences, new communities and buildings often attract a more homogenous “target” buyer group that developers have specifically identified. Apartment units in new construction condos are also likely to have nearly identical flooring, kitchens and bathrooms, since the few personal choices and upgrades offered by developers fall within a narrow range of materials and colors.

As you search for your dream home, you’ll probably hear a variety of opinions about whether you should purchase a newly built or resale residence. There are advantages to both. Our best advice is to educate yourself on current market conditions by using a real estate professional to guide your search. We also encourage you to consider your individual needs – not the age of the structure – when deciding what’s best for you.

Whether you’re a buyer looking to purchase a new construction condo or a resale home, contact Barbara and Annie for a complete market analysis of all available properties in your price range.

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