Trapped in Oakville, Developers Face the Impossible
May 21, 2018 11:56
Living in a subdivision has many perks. Chief among those perks is that there is a sense of community. When a group of buyers purchased their prebuilt homes, they imagined building a highly profitable and prosperous community. What they might now face is financial ruin. Due to buying at the peak of the market, these homeowners overpaid for their prebuilt homes and now have no resources to complete them. It has left homebuyers in an impossible situation.
The prebuilt homes in Mattamy’s Preserve were purchased in February of 2017 when the market was at its peak. During the frenzy of last year’s market explosion, the homebuyers leapt at the chance to get in a beautiful, newly-built neighborhood, but what looked like a great deal is turning out to look not so great. Thanks to new mortgage rules and provincial housing policies, their last year’s purchase might send the buyers into bankruptcy.
The buyers insist that the market rise in the Toronto area last year put them into an impossible situation. The soaring prices of housing last year had Oakville residents paying way more for their prebuilt homes than they are currently worth. Due to the new mortgage rules, the home buyers are now scrambling to find a lender who can offer them a mortgage, but that is subjecting them to higher interest rates and much riskier endeavors and options than they had less than a year earlier.
The decline in the Toronto real estate market has made buyers unable to sell their homes for the price at which they purchased them. When the price of their homes plummeted overnight, the buyers were unable to secure a loan of the amount they needed to pay for their house through traditional lenders and are now left with very little recourse.
Young families and first-time buyers who were excited about their new home builds are now finding that these houses might take all of their savings before even being finished and habitable.
The homebuyers of this Oakville subdivision are petitioning the Ontario Liberal government to find them the financing that they believed they were getting when they signed their contracts. They want the options they had before the new rules went into place and robbed them of financing options. Oakville homeowners would like the government to consider the impact the new regulations have had on the real estate market as a whole, especially the impact on those who are caught in the middle.
Oakville residents maintain that the housing rules and mortgage laws are an insult that will hit their finances hard. So hard, in fact, that it could lead the banks to foreclose on their homes. Homes that, in some instances, have not yet been finished.
The president of Mattamy, one of Canada’s largest homebuilding companies and the builder of the Oakville subdivision, commented that although the buyers are in an unusually difficult situation with mortgages, they signed a binding contract and it is important for them to follow through. The company, likewise, needs to do the same so they can pay their construction expenses.
The reason that the new rules were set into place was to make the average home in Ontario more affordable like in River Park South. Since foreign investors were encroaching too heavily on the red-hot market, the government felt it was their duty to step in and make things more reasonable for Canadians by slowing down the market rise. In this effort to save homebuyers, the government didn’t anticipate how their drastic and far-reaching real estate overhaul would affect those who were stuck in the middle of the transition.
The reality is that the housing market is unpredictable and can rise and fall steeply, even without the interference of governmental rules. While unfortunate for those who bought in the Oakville subdivision, that is the way that home buying goes. Many forecasters warned that there was a bubble in the Ontario market, and people still chose to sign a contract for a prebuilt home, aware that the market could fluctuate greatly.
There is little chance that the government is going to do anything for the home buyers in Mattamy’s Preserve, but if there is one positive thing that can come from the incident, it is that homebuyers might finally see how quickly things can turn and proceed with more caution going forward.
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