My Opinion: As Interest Rates start to Go up cities that were dependent on Money Laundering and crazy artificially low interest Rates are now paying the price ! I say sit back and enjoy the show
Last year, the real estate market in the Toronto region was so strong that builders were struggling to manage the crowds at their sales centers. This was the context in which Dionne Thompson purchased a home in the Queen’s Common development in Whitby, built by Mattamy Homes, in January. However, a year later, Thompson and her future neighbors were shocked to discover that Mattamy was selling similar houses for significantly lower prices. Mattamy, the largest home builder in the country, claims that the buyers are experiencing the effects of a weaker housing market in recent months, and that pre-construction homes are just as susceptible to these changes as resale properties.
“Thompson, a bus driver, purchased a 2-storey detached home for $955,000 as a family nest for her husband, children, and grandchildren. However, she now regrets the purchase as she found out that the same model was being sold for $859,000 in a nearby development by Mattamy. Mariam Boni also fell victim to Toronto’s competitive housing market last January, where she waited in line for 3 hours just to secure a ticket to visit the sales center the next day, after receiving an email from Mattamy about the release of the first phase of the development.”
a buyer of a home in Queen’s Common, a community of 600 homes near Highway 412 and McQuay Blvd., spent $899,000 plus additional money for upgrades, exceeding her target price of $500,000 to $600,000. Despite this, she stated that Queen’s Common would be a better place to raise her son. Mattamy, the company that built the homes, encourages buyers to view their homes as a long-term investment and understand the disappointment some buyers may feel. Prices in Queen’s Common are generally 6-8% lower than a year ago due to the market. Brad Carr, President of Mattamy, stated that in order to continue to sell and build homes, prices must be lowered to a point that the market will bear. He also mentioned that Mattamy had offered buyers the chance to increase their deposit up to $30,000 in exchange for reducing the cost of their homes by an equal amount, but this was not enough for some buyers. Carr also mentioned that when someone buys a new construction home, the risk transfers from the builder to the buyer once the contract is signed, not on the closing date when the house is actually built.
Interest Rate Hike causing a Pre -Construction Nightmare! As builders are defaulting on Construction
Hugh Heron, the principal of Herity Homes, stated that Mattamy’s pricing must be based on business factors, but he has not heard of such a practice in the five decades he has been in the business. He added that he can’t recall a time when builders have reduced pre-construction home prices, except possibly during the early 1980s global economic recession when the government offered incentives to revive the home building industry. The Ontario Home Builders Association’s CEO, Joe Vaccaro, was not available for comment.