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COVID and the housing market

Why Toronto is seeing more ‘vendor take-back’ mortgages as pre-construction appraisals fall short​

www.thestar.com

Why Toronto is seeing more ‘vendor take-back’ mortgages as pre-construction appraisals fall short

Buyers who have purchased a pre-construction freehold property and have received an appraisal that's fallen considerably short of their original purchase price, are sometimes offered a vendor take-back mortgage, which
www.thestar.com www.thestar.com

So basically you loose/give up your down payment?
Tarion doesn't come in to play?
Can you get some sort "insurance" to protect yourself?

 
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justride said:

Why Toronto is seeing more ‘vendor take-back’ mortgages as pre-construction appraisals fall short​

www.thestar.com

Why Toronto is seeing more ‘vendor take-back’ mortgages as pre-construction appraisals fall short

Buyers who have purchased a pre-construction freehold property and have received an appraisal that's fallen considerably short of their original purchase price, are sometimes offered a vendor take-back mortgage, which
www.thestar.com www.thestar.com

So basically you loose/give up your down payment?
Tarion doesn't come in to play?
Can you get some sort "insurance" to protect yourself?
Click to expand...
I can't read the article because of paywall. VTB mortgage shouldn't have any effect on your deposit (assuming you make payments as required). It does let the seller/builder avoid any issues with appraisal as it is their own money on the line (or an investor that has agreed to loan regardless of appraisal in return for more money). My guess is they are setting them up for a term (say five years) to let buyers close now. Hopefully between market improvement and paying down principal, buyer will be in a position to take out a conventional mortgage at the end of the term so builder/investor can get their money out.
 
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justride said:
click to read article

Click to expand...
All of the talk of deposits was related to people that couldn't close. The purpose of VTB is to allow the property to close. From the builder side, if you agreed to buy at 1.4 and current market value is 1.1, that avoids them having to sue you for the difference (and they would likely win but the media loves those stories and no builder wants that kind of publicity).
 
On the law suit side for people who can't close. A friend recently had that come up when a buyer could not close (he was the seller). The lawyer said take the down payment but for anything else the only people that will win are the lawyers, regardless of who the court says wins. Basically the seller/builder goes to court, wins, but if the buyer has/had money problems that prevented them from closing in the first place...they are likely already tapped out, good luck getting that blood from that stone. Easier in most cases to just take the down payment and move on.
 
GreyGhost said:
The only way that works is if government gives up million dollar lots to sell for 399. Even with free land, 399 in construction costs doesn't go far anymore. As government controls the books and optics, they just call it underutilized land and grossly undervalue it so the project looks less like a dumpster fire.

Edit:
Sadly affordable and ownership have permanently diverged. Affordable rent (actually affordable not market minus 10% crap) even with semi-unlimited government spending is a stretch goal.
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Politicians perform magic. I met a magician once and we got talking about his trade. He shared some secrets but the main concept was not to pull a rabbit out of a hat but rather having the audience think they're seeing you pulling a rabbit out of your hat. Similarly cutting a woman in half or the swords through the box routine. She may look full sized but is petite and wears high heels which she kicks off getting into the box. She may be as flexible as a 15 year old gymnast. She may be well padded to enhance her size while the box is built and painted to make it look smaller than it is. Distraction, smoke and mirrors.
 
backmarkerducati said:
On the law suit side for people who can't close. A friend recently had that come up when a buyer could not close (he was the seller). The lawyer said take the down payment but for anything else the only people that will win are the lawyers, regardless of who the court says wins. Basically the seller/builder goes to court, wins, but if the buyer has/had money problems that prevented them from closing in the first place...they are likely already tapped out, good luck getting that blood from that stone. Easier in most cases to just take the down payment and move on.
Click to expand...
For a first time.buyer, that makes sense. For a step up buyer there is often significant equity in the existing house. They may have hundreds of thousands in equity but no way to come up with hundreds of thousands more. Lots of blood there beyond the deposit.
 
crankcall said:
The Feds are bringing back the war time housing project . 1000-1400 sq ft boxes , easy build and promising fast approvals .

Now we just need to find that builder that will give up a 500k lot to build a 399 k home .
The lineups should be huge …..


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I like the wartime house. Small lots, many of those were kitted and near zero waste as the framing was modulo 8 and 12 boxes.

There is lots of govt lands available, you could put up a few thousand on the Pick airport site and still have a giant airport.

Lease the land to keep it affordable.
 
GreyGhost said:
I can't read the article because of paywall. VTB mortgage shouldn't have any effect on your deposit (assuming you make payments as required). It does let the seller/builder avoid any issues with appraisal as it is their own money on the line (or an investor that has agreed to loan regardless of appraisal in return for more money). My guess is they are setting them up for a term (say five years) to let buyers close now. Hopefully between market improvement and paying down principal, buyer will be in a position to take out a conventional mortgage at the end of the term so builder/investor can get their money out.
Click to expand...
Risky game.

VTB are usually at a higher rate, 1 or 2 year term and non renewable. Miss 1 payment and the mortgage holder can sell the house 15 days later under power of sale on a 1day best offer basis with a 30 day close.

Same goes if you can’t arrange a mortgage at the end of the term.
 
Mississauga
On Britannia Rd West. between Bidwell trail and Douguy blvd
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The price on the townhouse went from 1.1m to 1.4m than the price disappeared on the sign.
Heavy construction vechiles were grading the site recently
 
mimico_polak said:
Well the brokers are saying housing coming back up! So it must be true!

apple.news

Posthaste: Get ready for the 'great adjustment' in Canada's housing market — Financial Post

Realtors see home prices regaining pandemic peaks once Canadians accept the 'new normal' in borrowing rates
apple.news apple.news
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The USA interest rate / inflation forecast was good for the stock market yesterday. What does that do for housing A, B and C?

Housing A is big money investors, condo building corporations with deep long term pockets. I see them as similar to forestry companies, prepared to wait decades for the crop to come in. Yearly fluctuations don't phase them like they hit first time or move up buyers, housing type B. Housing C is the reno / flipper market, not financially secure enough to stick their heads out too far.

Will the B's, first timers, be more cautious and look at their potential situation five years own the road?

Or did two houses sell yesterday and one went $500 over list? Therefore 50% of the houses sold went above list.
 
nobbie48 said:
The USA interest rate / inflation forecast was good for the stock market yesterday. What does that do for housing A, B and C?

Housing A is big money investors, condo building corporations with deep long term pockets. I see them as similar to forestry companies, prepared to wait decades for the crop to come in. Yearly fluctuations don't phase them like they hit first time or move up buyers, housing type B. Housing C is the reno / flipper market, not financially secure enough to stick their heads out too far.

Will the B's, first timers, be more cautious and look at their potential situation five years own the road?

Or did two houses sell yesterday and one went $500 over list? Therefore 50% of the houses sold went above list.
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Comparing sold prices versus asking is a completely meaningless exercise. You need to compare versus comparable sales. I know one estate property whee the agent said it would get x, the family said no, list it for 4x. Many price drops later, it was listed for 0.95x and sold for x. Did it sell for more than asking? Less than asking? All meaningless. It sold for the comp value.
 
And that’s the root of the problem, stupid agents , they will take a dum listing because even after 4 price drops , they still collect commission. And integrity is pretty rare in that trade right now .


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crankcall said:
And that’s the root of the problem, stupid agents , they will take a dum listing because even after 4 price drops , they still collect commission. And integrity is pretty rare in that trade right now .


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I would argue stupid sellers. Agent got their five figure cheque eventially. Grossly overpriced listing is easy as nobody wants to see it. If by some miracle someone really wanted the property and paid the asking price, agent gets a six figure cheque. Nothing to lose really.
 
GreyGhost said:
I would argue stupid sellers. Agent got their five figure cheque eventially. Grossly overpriced listing is easy as nobody wants to see it. If by some miracle someone really wanted the property and paid the asking price, agent gets a six figure cheque. Nothing to lose really.
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And I'll go one further, and say 'greedy sellers' because they think they can get much more. The agent, in the end, will list for whatever the client will say it should be listed for, recommendation or not.

Fact is that a lot of sellers today think they can get top dollar for their properties, and as such, those are sitting on the market. People won't pay top money for garbage shacks like they did at 1% rates and market insanity. Your shack isn't worth it...regardless of what you think or your agent tells you.
 
Bought for 3.5 in 2020. Tear down and rebuild. Listed for 14M. Burned to the ground. 27 Dempsey Cres. Interest on that construction loan must have been burning.

On the insurance side, it would be interesting to know how this was dealt with. Do you keep giving the insurance company progress updates and they keep bumping the rate to match higher insured values? There is no way construction was 11M on this. Housesigma estimates market value at about 10M (and it is having trouble being accurate recently). Is the owner hoping to get a cheque for 10M and sell the empty lot for 3.5? Good luck with that.

EDIT:
More brilliant criminals. The neighbouring very expensive homes have cameras which caught them running away carrying gas cans. Wtf. leave the cans morons. So dumb.

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nobbie48 said:
The USA interest rate / inflation forecast was good for the stock market yesterday. What does that do for housing A, B and C?

Housing A is big money investors, condo building corporations with deep long term pockets. I see them as similar to forestry companies, prepared to wait decades for the crop to come in. Yearly fluctuations don't phase them like they hit first time or move up buyers, housing type B. Housing C is the reno / flipper market, not financially secure enough to stick their heads out too far.

Will the B's, first timers, be more cautious and look at their potential situation five years own the road?

Or did two houses sell yesterday and one went $500 over list? Therefore 50% of the houses sold went above list.
Click to expand...
I think the change yesterday was the US markets starting to bake in polls suggesting Trumps rising and Bidens falling popularity means Trump (uuugh!) in ‘24 is closing in on certainty.
 
Mad Mike said:
I think the change yesterday was the US markets starting to bake in polls suggesting Trumps rising and Bidens falling popularity means Trump (uuugh!) in ‘24 is closing in on certainty.
Click to expand...
The Central Bank also said rates are done rising, and are anticipating 3 rate cuts next year…

Recession averted!
 
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