During the first two quarters of 2017, we experienced the last boom of a 25 year cycle in Real Estate. Sadly, no one wants to believe it. 2017, although was not the best time to buy a home, it certainly was the best time to sell a home.
Several Home Builders in the GTA, including Oakville and surrounding communities, SOLD OUT 100s of new construction homes in days of being released. Townhouses, Semi-Detached, Condos and Detached Homes were purchased by home owners and investors!
In the past years, in developing towns and cities, I have never seen any builder allow a home buyer to add an ASSIGNMENT CLAUSE in the new construction offer. However that was not the case in the height of the 2017 Market. This clause was most appealing to the Investor buyer and encouraged them to commit to paper on the spot without realizing the consequences. Consequences of a shifting market, a changing marketing or a depreciating market in terms of property values, and let me tell you, it is here.
In North Oakville specifically, there are over 250 Homes listed on both the Oakville Real Estate Board, OMDREB and on TREB, the Toronto Real Estate Board. More than half these homes are Assignments, where the builder has allowed the Purchaser to sell the original Offer or papers to a new prospective buyer. What the builder failed to disclose were the facts that Assignment Fees, Tarion Transfer Fees, Real Estate Commissions, Penalty Fees etc would have to be absorbed by the original buyer. This for some would eat into any profit of course. Many of the assignments that are available in North Oakville range in price from $1,200,000 to $2,000,000+. Hardly the price points that one would want to be stuck with in the event the market shifts any further.
Some investor clients have priced their homes right out of the market, from $100,000 to over $350,000 of what they originally paid for them. Many new home buyers who are looking at these homes with their Realtors, feel that the values are just not there and do not want to overpay for a home in our changing market. With climbing Interest rates and depreciating home values, protecting property values and home equity needs to seriously be considered now.
What are the options? Some buyers are walking away from their deals and losing their deposits which are as high as $100,000+. In the event the Builder now has to sell the home for less money, they will sue for the difference or loss of monies from the original buyer.
Many original owners are opting to rent their homes if they can’t sell, in the event they don’t sell. But this option is leaving some to put additional monies into the monthly payment because the rents are not covering the cost of the mortgage, property taxes and home improvements as fences, appliances, central air etc.
For example, one home owner who did close on his $1,200,000 home, leased his home out for $2,600 per month and has to still put in $1,000+ per month to make the Mortgage Payment. He has gone variable at 2.45% with a 35% downpayment. But what happens in the event, that rates climb further and he is forced to lock into the 3.44% rate or more? So many questions and scenarios to consider.
Many Assignments in North Oakville have been for sale since 2017, as investors began to put their homes on the market early, as allowed by the Builders. Unfortunately nothing has sold and there is now an abundance of Assignments available for sale making this a great time for Buyers to look at getting into the market and taking total advantage. Interest rates are still considerably low at 3.44% for a 5 Year Fixed or 2.39% for a Variable Rate, and home prices have come down! So, why not consider winning and at least try an offer on one of the many Assignments that are available for sale? Rates will go up, guaranteed!
We know of several Assignments that need to be sold and few that are being sold at prices originally purchased from the Builder. These are the listings to take advantage of today!
For more information, call us!
Wayne and Virginia Munden
905 334 1660