With interest rates rising in the United States and Canada, homebuyers face a practical question: is buying a newly built home still a sound choice in today’s economy? Over the past five to seven years, purchasing an apartment in a newly constructed building has become safer for several reasons. Financing mechanisms have shifted away from direct cash paid to developers toward bank escrow arrangements that release funds as milestones are met. Transparency has also improved: data on construction projects is collected in centralized housing information systems, giving buyers a clearer view of what is under construction. And incentive programs for new builds exist in many markets that help reduce monthly payments compared with similar loans on resale properties. Depending on the program and market, those benefits can cut payments by roughly 15 to 35 percent. Attribution: North American Housing Market Analysis, 2024.
Banks carefully evaluate both the developer and the buyer to reduce credit and operational risks. It is no surprise that the share of overdue mortgage payments on new-build loans tends to be lower than on loans for existing homes. The principle remains the same: new projects bring unique challenges, but the safeguards around construction and repayment discipline help keep risk in check. Attribution: North American Banking & Real Estate Review, 2024.
So is it necessary to calculate risks when buying an apartment in a new building? In North America the answer is yes, always. First, buyers should ensure that project declarations and related information are accessible in the Unified Housing Construction Information System. Second, the developer’s scale and financial profile matter, along with the overall debt load. Developer ratings—rankings based on construction volume or revenue—are useful tools for home buyers in this regard.
A buyer will feel more confident if the developer is among the country’s top builders by volume and is active in the region where the project is located. A large developer often demonstrates greater sustainability than smaller, local players, thanks to economies of scale and stronger reputational risk management. This stability translates into more predictable delivery timelines and better warranty coverage for new homes.
In major markets, the top builders in the comfort-class segment typically manage several concurrent projects, signaling long-term commitments. A developer involved in multiple projects is usually more invested in steady performance, which reduces the probability of delivery delays. The portfolio’s mix across areas, building types, and class levels also matters for resilience.
Beyond project lists, the financial and operational efficiency of the developer remains crucial. Inexperienced buyers often rely on disclosed financial statements, which larger developers publish on their corporate sites. In markets where disclosure is common, those reports shed light on liquidity, leverage, and cash flow.
A developer’s sustainability is closely tied to its ability to meet loan obligations. Interested buyers should look not only at the debt volume, but also at the amount held in escrow accounts. When escrow balances exceed project debt, the bank’s stake in the project is reduced, which lowers the risk of financing problems for the buyer.
Investors and buyers can glean strategic flexibility from IFRS-based financial statements. The ratio of net debt minus escrow to EBITDA provides a snapshot of balance-sheet strength and the capacity to pursue favorable land acquisitions or consolidation in tougher markets. Among leading developers in the first half of 2024, several showed strong balance sheets and conservative debt profiles, with some reporting negative net debt.
The question of price remains central. In recent years, the price per square foot for new apartments in major North American markets has risen, reflecting demand and constrained supply. Many observers worry that new-construction prices have peaked, but that view often overlooks the underlying demand dynamics.
Two reasons keep the market resilient. First, the housing construction sector has adapted to higher interest rates and continues to generate new demand for homes without eroding the real value of the assets. Second, construction technologies and energy-efficient features in new buildings elevate quality of life in a lasting way, helping prices stay aligned with inflation over time.