When deciding on a new home, the first question that is most often asked is whether to rent or own.
But once you decide on buying a home, the next question becomes – New or Resale?
With new construction popping up all over the city, the choice between resale or new construction is getting more difficult than ever. It’s easy to be hypnotized by the shiny finishes, luxurious sound-proofing and resort amenities of a new build, but what about the price tag and the uncertainties with purchasing a property that has yet to be built? With older buildings you may get more square footage, better locations and more attractive purchase prices, but have you considered the necessary repairs that may come up with an aging property? We are here to lay out the pros and cons of an older resale or new construction for your New York apartment purchase in an attempt to make this difficult decision just a little bit easier.
New Construction – Pretty, but Pricey
New construction can be a tempting option when searching for your next apartment purchase. They usually draw you in with snazzy marketing and well-catered open houses, but it’s not all smoke and mirrors. New construction offers the opportunity to be the first to live in a particular unit, gives you access to modern appliances and finishes, and provides conveniences like central air, and resort-style amenities like pools, gyms and movie theaters. Because new construction leaves a lot in the hands of the developers, it’s important to do your homework and know exactly what’s in store before you sign on the dotted line.
With new construction, buyers may pay more of the closing costs. These may include, but are not limited to, expenses such as paying the seller’s attorney and paying for part of the super’s apartment. However, sometimes there is an attractive tax abatement involved with a new construction purchase. Your broker should be able to give you sound advice about all the financial issues involved.
Most of the time new construction is just that – under construction. Typically, a developer has to sell 70% of a building before they can get funding to start construction, so you may be purchasing a property you won’t be living in for 12-18 months. Because units are often sold before a building has been constructed, you won’t be able to tour your unit like you would an existing resale property. This puts an emphasis on the need pay close attention to the building plans, finishes and square footage. It also requires a bit of an imagination if the builder has not created a sales model. Often times when moving in, the entire building and its amenities are not complete, so you may be living in a construction zone for a while.
If you are considering new construction, it’s also important to research the hidden costs or potential surprises when living in the property long term. Will the building rent out some of the units? What are the costs to the residents to maintain the vast amenities? What precautions are the developers taking for sound proofing the building? Are there empty lots nearby that may also be future construction sites? Do your research to avoid some costly surprises come move-in day.
Resale – Aged, but Established
Stepping away from the glitz and glamour of new construction, let’s take a look at the other 78 percent of the market – resale! Sure you might not have a rooftop pool or a doggie daycare, but with resale you know exactly what you’re going to get since you can walk through the space. Generally speaking, older buildings will have larger apartments versus new construction apartments which put emphasis on maximizing returns. Not only that – resale inventory in New York City is up 32 percent since 2013 which means you can likely find exactly what you’re looking for and will have room to negotiate.
It’s also easy to collect valuable information about a resale that just isn’t accessible with a new construction property. What will your property taxes look like? How is the energy efficiency of the apartment? What are the neighbors like? How many of the units are rentals and how many are occupied by private owners? What will you spend in amenity fees every year? These are all easily answered questions that are almost impossible to determine with new construction properties.
Even if an existing property doesn’t have all the details you are looking for in your new apartment, the beauty of owning is that you can remodel to suit your needs. Because of the availability of resale properties, you can negotiate a sale price you’re comfortable with while leaving a bit of room to make your new place your own. Regardless of what you decide, either new construction or resale, apartment hunting in New York can be tough to navigate so be sure you work with a trusted and experienced broker. They can further discuss the pros and cons of resales and new construction, making sure you make the choice that is right for you.
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