Anybody get caught up in this mess? | GTAMotorcycle.com

Anybody get caught up in this mess?

mimico_polak

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Buy a house at pre-construction, don't sell your existing house, market takes a bit of a correction, and now you can't qualify for the new house...what do you do? Blame the banks? Blame the builder? Blame the government? Or own up and admit you made the wrong call?

https://www.thestar.com/business/20...arkets-peak-now-they-face-financial-ruin.html

I'm not even sure what to make of it. While I feel bad for the members of this group, I don't have much sympathy because I'm seeing more of these news articles where people get mortgaged to the tits and then when it doesn't go their way they kick and scream that they're 'unfairly' in duress....

Here's their community site if you're interested...

https://www.communityforfairness.ca/mattamy

So glad I didn't listen to my agent, broker, bank 'advisor' to take on an addition 200k debt...
 
Sometimes speculators make money, sometimes they get burned. They took on the risk ... they created the situation ... this time, they lost. Their problem.
 
If the houses had appreciated 200K between purchase and construction would the buyers be calling up Mattamy asking for a price adjustment because the contract price didn't match fair market value?

This is a good reminder that in the short term, real estate is not a guaranteed positive return investment.
 
My brother did. Sold his Mississauga house to move to his new house being built in Wasaga Beach. Buyers of his Mississauga house had to back out of the sale due to market crash, so he had to resell it. They lost their $30,000 deposit to him.

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Not a lot of sympathy for these people....buying a house a year in advance is stupid to begin with.

And I don't buy their "financial ruin" scenario either. If they could afford it then, they can still afford it. Yeah, the house may not be worth what they're paying for it today, but in 10 or 15 years...it probably will be again. And yes, mortgage rates have gone up a little since a year ago, but once again, if such a small move on rates puts them in the "financial ruin" category, they bought more freakin house then they could have afford anyways - exactly which way did people THINK interest rates were going to go a year ago?

These people need to put on their big boy panties, close on the deals, make the exact same mortgage payments today you agreed to a year ago, and deal with it.
 
My brother did. Sold his Mississauga house to move to his new house being built in Wasaga Beach. Buyers of his Mississauga house had to back out of the sale due to market crash, so he had to resell it. They lost their $30,000 deposit to him.

I could be wrong, but if your brother wanted to be a dick I'm pretty sure he could have sued them for the remainder of the sale balance, and even in his scenario where he sold it a second time (at probably a lower price), the difference between what the original seller agreed to, and what it actually sold for.

Hope he came out the other end at least dollar neutral on the mess.
 
Speculation is always a gamble. I do feel sorry for those private sellers who had buyers walk away from deals with 30 and 60 day closings. This happened to a few of my neighbors, investors had bought their homes then when the market cooled, they bailed before closing because walking away from a deposit was cheaper than taking the initial hit on their commitment to purchase. This has a domino effect on innocent buyers.

Investors know it costs an innocent homeowner >$25K cash to litigate, they take their chances that wont happen. If it does, they can stretch it for years and still find a way to wiggle out.
 
My brother did. Sold his Mississauga house to move to his new house being built in Wasaga Beach. Buyers of his Mississauga house had to back out of the sale due to market crash, so he had to resell it. They lost their $30,000 deposit to him.

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The ones just outside of Elmvale? I pass those each time we go to the cottage...look nice! Too bad it's so far as I'd buy one lol. We are not far from the decrepit drive-in there.

Anyway looks like it may have worked for him. He could've returned it, but I don't think I would. Also he could sue them for the difference in the final selling price but that's a tough battle I think.

Hope it worked out in the end.
 
Speculation is always a gamble. I do feel sorry for those private sellers who had buyers walk away from deals with 30 and 60 day closings. This happened to a few of my neighbors, investors had bought their homes then when the market cooled, they bailed before closing because walking away from a deposit was cheaper than taking the initial hit on their commitment to purchase. This has a domino effect on innocent buyers.

Investors know it costs an innocent homeowner >$25K cash to litigate, they take their chances that wont happen. If it does, they can stretch it for years and still find a way to wiggle out.

One of my buddies had a buyer get cold feet, so instead of risking re-listing and going through the motions (and the fact he bought a more expensive home he already closed on and was paying 2 mortgages) he ended up taking $100k wash just to get rid of the first house. He still made close to 700k on his initial purchase so it wasn't that bad...700k profit is good...but 800k profit is better! He did say he wasn't sleeping for a month because carrying 2 mortgages isn't fun.
 
So much wrong in that article regarding how hard done by these people are. 1.6 million dollar homes, for people in an age group that have toddlers? I can't even imagine what a person is thinking if they are that tight on the monthly bills; what on earth would they do when a car needs replacing, house starts needing repairs, wife being on maternity leave, etc. Once upon a time, people didn't have to live in multi million dollar homes. Great if you are wealthy, but somehow these folks don't seem to fit that profile
 
They say they are on the brink of not being able to close on their pre-construction home purchases and fear they will be forced to forfeit hundreds of thousands of dollars in deposits.

So, uh...they could close just fine under the exact same terms and conditions a year ago..but can't now?

Why?

In addition to declining property values, their dilemma has been compounded by new mortgage stress tests that took effect nationally in January, qualifying them for smaller loans than they would have been able to access a year ago.

Uhh...again...some of these people didn't apply for mortgages before signing on the dotted line, either?

If they had, they'd be bound by the old rules pre-stress test, so that would be irrelevant.

The fact it's an issue now apparently tells you that they financed themselves right to the very edge (and probably beyond) of affordability to begin with.

Yeah, this just gets dumber and dumber.
 
Not a lot of sympathy for these people....buying a house a year in advance is stupid to begin with.

And I don't buy their "financial ruin" scenario either. If they could afford it then, they can still afford it. Yeah, the house may not be worth what they're paying for it today, but in 10 or 15 years...it probably will be again. And yes, mortgage rates have gone up a little since a year ago, but once again, if such a small move on rates puts them in the "financial ruin" category, they bought more freakin house then they could have afford anyways - exactly which way did people THINK interest rates were going to go a year ago?

These people need to put on their big boy panties, close on the deals, make the exact same mortgage payments today you agreed to a year ago, and deal with it.

I also don't have sympathy for them, but it's not as simple as just paying. For rough numbers, they paid 1.6 for a house that now sells for 1.5 or less while at the same time getting 100K less than expected on their sale. Say they thought they had 320K equity and were signing up for a ~1.3M mortgage. Now they have 220K equity and the bank only appraises the house at 1.5 so to get 20% they need an additional 200K (1.6M-1.5M+100K) from somewhere. That's not chump change and as they were probably already under crushing mortgage load anyway they can't get access to it (or it will be at 10+% which just delays the inevitable financial collapse). Losing their 200K deposit is probably 2/3 of the equity they have built in their current house.
 
^^ Fair enough, but I come full circle to my statement that buying a house a year in advance is stupid.
 
I could be wrong, but if your brother wanted to be a dick I'm pretty sure he could have sued them for the remainder of the sale balance, and even in his scenario where he sold it a second time (at probably a lower price), the difference between what the original seller agreed to, and what it actually sold for.

Hope he came out the other end at least dollar neutral on the mess.
He sold his Mississauga house for the same or close to it fast...which was very lucky for them. Had things turned out where he couldn't sell his Mississauga home and was now carrying two houses, things could've turned ugly. I can see why people would try and recoup their costs in court. Imagine the stress of carrying an existing house and a new build? What a strange situation to find yourself in..the housing market is no different than the stock market, only difference is people in the housing market don't seem to know the rules.
 
what I don't get, is these Mattamy homes come out of a cookie cutter
why on earth would you go firm on a purchase offer for a house like that
if the one you currently live in, is still on the market?

I'm no real estate guru, but I do know you keep at least one condition on the offer
until every duck is lined up, you know, like a financing condition
 
The ones just outside of Elmvale? I pass those each time we go to the cottage...look nice! Too bad it's so far as I'd buy one lol. We are not far from the decrepit drive-in there.

Anyway looks like it may have worked for him. He could've returned it, but I don't think I would. Also he could sue them for the difference in the final selling price but that's a tough battle I think.

Hope it worked out in the end.
No he bought a lot one street across from the beach to retire to years ago when land in Wasaga Beach was cheap.

In the end what saved the couple who had to bail was the demand in Mississauga was still there as his house resold fast for around the same. It all worked out in the end.

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^^ Fair enough, but I come full circle to my statement that buying a house a year in advance is stupid.

The year before, buying a house a year in advance would put you ~100K ahead (or alternatively waiting could price you out of the market).
 
He sold his Mississauga house for the same or close to it fast..

Good news...so with the $30K in his pocket from the surrendered deposit he probably made out quite well in the end then I'm going to guess.

The year before, buying a house a year in advance would put you ~100K ahead (or alternatively waiting could price you out of the market).

Sure, but people seemed oblivious to the risks that it could also go the other way, as it indeed did. And here we are.

Gambling on maybe $10 or $20K is one thing, but these people were effectively gambling with hundreds of thousands of dollars. It shouldn't take a brain surgeon to see that there was a massive risk there, but potential reward apparently blinds people to apparent risk. Just like the more traditional forms of gambling I guess, ironically.

For many in previous years there were massive rewards, but honestly...in February of 2017 anyone that didn't have their head stuck in a pile of sand knew that the housing market was on the bleeding edge of a correction, even before the foreign buyer tax happened.

I still can't scrape up much sympathy, sorry.
 

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