{"id":11601,"date":"2019-02-04T10:10:12","date_gmt":"2019-02-04T18:10:12","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=11601"},"modified":"2019-02-04T10:13:41","modified_gmt":"2019-02-04T18:13:41","slug":"lofty-price-gains-for-pre-construction-buyers-are-a-thing-of-the-past","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2019\/02\/lofty-price-gains-for-pre-construction-buyers-are-a-thing-of-the-past\/","title":{"rendered":"Lofty Price Gains for Pre-Construction Buyers are A Thing of The Past"},"content":{"rendered":"<p style=\"text-align: justify;\">If prices for new condos in Vancouver keep dropping, some homeowner hopefuls who signed contracts to purchase pre-construction units may be left in lurch and unable to ultimately close on units, a local realtor warns.<\/p>\n<p style=\"text-align: justify;\">When someone buys a condo pre-construction, what they are really doing is entering into an agreement to purchase the unit at a later closing date. They\u2019ll typically need to get pre-construction mortgage approval from a lender, even though they won\u2019t actually begin making mortgage payments until the closing date, which falls around the time the unit is completed.<\/p>\n<p style=\"text-align: justify;\">In many cases, however, a borrower will need to re-qualify for a mortgage as closing time approaches. This could create problems for buyers who inked deals near the high-rise market\u2019s peak, especially the longer a downturn persists and the lower prices fall from previous peaks.<\/p>\n<p style=\"text-align: justify;\">\u201cThe banks appraise the unit \u2014 if they feel the values are down 15 percent or 20 percent since you bought it, you\u2019re not going to get the full loan that you were hoping for,\u201d Steve Saretsky, a Vancouver realtor and founder of the Vancity Condo Guide, tells Livabl.<\/p>\n<p style=\"text-align: justify;\">A buyer could be left to make up the difference on their own. If they can\u2019t, they\u2019ll be out their deposit and may face legal action from the developer. Buyers running into this situation in the near future might face even greater challenges due to previous pricing trends in the new-construction sphere.<\/p>\n<p style=\"text-align: justify;\">Saretsky notes that in a hot Vancouver market, \u201cmost of the developments have been charging above market value\u201d on the expectation of where prices would be two years down the road, when the building would be completed. But in the current climate, lofty price gains are a thing of the past. In fact, prices are going down.<\/p>\n<p style=\"text-align: justify;\">Last month, the benchmark price of a Vancouver area condo apartment was $664,100, up 0.6 percent from a year ago but down 0.6 percent from the previous month, according to the Real Estate Board of Greater Vancouver.<\/p>\n<p style=\"text-align: justify;\">If the pre-construction pricing was already above market, further cooling will only make the spread between what a buyer qualifies for and what they agreed to purchase a unit for even wider.<\/p>\n<p style=\"text-align: justify;\">If, as Saretsky suggests, an increasing number of pre-construction buyers may find themselves unable to afford the units they have agreed to purchase, it wouldn\u2019t be the first time this trend has played out in a major Canadian housing market.<\/p>\n<p style=\"text-align: justify;\">Ben Myers, founder of Bullpen Consulting, a boutique firm that advises condo developers, says it has happened in Toronto in the past. \u201cIt happened a lot in the \u201880s,\u201d he tells Livabl.<\/p>\n<p style=\"text-align: justify;\">In some cases, buyers have been able to work out arrangements with developers. Other times, the outcome was very different. \u201cBecause no one could close, the developer couldn\u2019t get the money to pay back the bank [which financed the project], and then they just defaulted on the project,\u201d Myers says. \u201cThe entire project went to the bank, and the bank had to deal with it.\u201d<\/p>\n<p style=\"text-align: justify;\">The risk of a scenario like that creates a balancing act for developers. \u201cYou always want to sell at the highest price, obviously, but if you go too high, there\u2019s always this potential that prices go down and then there\u2019s closing risks,\u201d Myers explains.<\/p>\n<p style=\"text-align: justify;\"><a href=\"https:\/\/www.livabl.com\/2019\/01\/falling-vancouver-condo-prices-big-trouble-pre-construction-buyers.html\">Falling Vancouver Condo Prices Could Spell Big Trouble for Pre-Construction Buyers<\/a> by Josh Sherman | Livabl<\/p>\n","protected":false},"excerpt":{"rendered":"<p>If prices for new condos in Vancouver keep dropping, some homeowner hopefuls who signed contracts to purchase pre-construction units may be left in lurch and unable to ultimately close on &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2019\/02\/lofty-price-gains-for-pre-construction-buyers-are-a-thing-of-the-past\/\">read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[],"class_list":["post-11601","post","type-post","status-publish","format-standard","hentry","category-market-updates"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Lofty Price Gains for Pre-Construction Buyers are A Thing of The Past &#8226; Rory C Real Estate | Oakwyn Realty<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.roryc.ca\/blog\/2019\/02\/lofty-price-gains-for-pre-construction-buyers-are-a-thing-of-the-past\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Lofty Price Gains for Pre-Construction Buyers are A Thing of The Past &#8226; 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