Houses in our desired neighborhood of Lansing and Willowdale are not moving. 40+ days on the market. These are larger homes with outdated interiors. Whats the theory? Will prices start to decline? Most are listed at 2M.

My husband and I dream of moving back to Canada while our children are still young. Specifically GTA since we have family there. I am a Canadian citizen, but we currently live in Europe and neither of us currently has Canadian employment income, just local.

We are considering buying a property in the GTA, renting it out for a while until we get our financial picture in order and are able to move, and then either moving into it or keeping it, depending on what we are able to buy.

Some relevant details:

• I am a Canadian citizen but have lived abroad for many years.
• My husband is not Canadian.
• We live and earn our income in Europe.
• Our local bank is Deutsche Bank.
• We have family and friends around Oakville, Georgetown, Etobicoke but our residential and tax address is currently outside Canada.
• We would be looking at either short or long-term rental, depending on what makes more sense financially.

I am trying to understand the financing and practical side before speaking to banks.

For anyone who has done something similar:

1. Which Canadian banks or mortgage brokers are good at handling Canadian citizens living abroad?
2. What down payment should we realistically expect to make to break even: 20%, 35%, or more?
3. Will lenders consider foreign employment income or assets?
4. Would it be feasible to obtain a Canadian mortgage?
5. Are there major tax or withholding issues we should understand as non-resident landlords?
6. What kind of costs should we expect?
7. Are there particular areas or property types in Toronto, Oakville or Mississauga that work better as rentals but could also suit a family later?
8. What mistakes should we avoid?

We are still at the research stage. I would especially appreciate hearing from people who have personally bought in Ontario while living abroad, or from licensed mortgage professionals who regularly work with non-resident Canadians.

(Ps. I also realize housing affordability is a sensitive topic in the GTA, and I understand why people are frustrated about speculative investing.

Our situation is a little different. I’m Canadian , we love Canada, and genuinely plan and dream to relocate to Canada, and we’re hoping to establish ourselves before we move. The idea is to rent the property while we’re still living abroad, rather than leave it vacant, and eventually either live in it ourselves or keep it.

I’m really here to learn from people who have been through this process. If you think this is a bad idea, I’d genuinely appreciate hearing why, but I’d be grateful if we could keep the discussion constructive.)

TIA 🙏

I'm starting to see condos that are cashflow neutral, so I'm debating if it makes sense to buy one as an investment property at this point.

I already own property in the GTA and am ok to hold for 3-5 years before seeing any appreciation if that's relevant. I see principal paydown as still a win. Ideally would love to buy a duplex but that is out of my budget and I don't feel comfortable buying outside of the GTA with return to work being a strong push.

Here’s a scenario: You bought a presale home a few years ago, construction is almost complete, but the home is worth significantly less now compared to what you agreed to pay for it years ago. What do you do?

Here’s the math: You paid a $68,000 deposit. Your purchase price was $715,000, but the home is now worth closer to $585,000. Do you complete the purchase and crystallize that loss?

That’s a hard place to be in, but here’s the rock: If you walk away from the purchase, you lose your deposit, and the developer can sue you for an additional $70,000.

This is a real-world example, with numbers rounded, currently playing out in the Supreme Court of British Columbia, where Metro Vancouver developers have initiated dozens of lawsuits in recent months against individual presale purchasers, according to a review of court filings by The Globe and Mail.

The above lawsuit was initiated by Zenterra Developments against a buyer on their King & Crescent project in Surrey, B.C. They’ve also filed similar suits against buyers at The Commons, a project in Langley, B.C. But Zenterra is far from the only developer taking legal action.

Other examples of suits against buyers include Fleetwood Village 2, by Dawson + Sawyer in Surrey, Hue by Marcon in Port Moody, B.C., Towns at Lynn by Mosaic Homes in North Vancouver, and The Butterfly by Westbank in Vancouver. In many of those instances, the developer has sued multiple buyers. The Globe and Mail found two dozen separate lawsuits across just these projects.

Reached for comment, Mosaic said they have made efforts to work with buyers to support their closings and that only a small number of purchasers did not close. All of the other developers declined to comment or did not respond.

All of the lawsuits follow the same general structure: A buyer signed a presale purchase agreement a few years ago, they paid a deposit, then did not close on their purchase.

In most cases, the developers managed to resell the units, but at a much lower price due to today’s weaker market conditions, and are now suing the original buyer for breach of contract and damages stemming from the sale price difference. In several instances, developers are also claiming damages for costs associated with carrying the units, having to remarket the property and even strata fees.

The exact reasons those buyers did not complete their purchases were not stated in court documents, but the sheer volume of lawsuits and their similarities indicate that it wasn’t just a whim: there are larger market forces at play.

Mike Stewart – a Vancouver-based realtor who specializes in presales – and Craig Anderson – vice-president of sales for Magnum Projects, a marketing and sales firm – both said, independently, that the following scenario is becoming increasingly common: a buyer agreed to a presale for $700,000 a few years ago, they go to their bank to get an appraisal ahead of closing, but the bank says it’s only worth $600,000 now and that the buyer has to come up with the remaining $100,000 if they want financing.

That’s not always possible, and it may not even be worth it.

But whatever the reasons, developers are taking legal action. Although there have been previous examples of this, both Mr. Stewart and Mr. Craig say it was rare when the market was good, because developers could often resell the unit at a higher price. Times are different now.

“Developers are not messing around any more,” said Mr. Stewart. “They are going after people because their costs are so high and their losses are so high. So they need to sue people.”

“For the last two decades, they would just say, ‘Well the home was $1-million, we’re now gonna sell it for $1.1-million. And sometimes, they’d give half the deposit back, because they were looking at managing their reputation,” said Mr. Anderson. “Now, they’re willing to spend legal fees to go after people and go after them hard. You see they’re [claiming] fees, including the strata fees [the buyers] were supposed to pay and all the legal fees. They always get a little pound of flesh, but now they’re going for every dollar.”

Illustrating how much market values have fallen, Mr. Anderson said Magnum has been involved with four low-rise wood-frame projects in Surrey recently and that the market values were around $870 per square foot last year. They are now closer to $700.

Both Mr. Stewart and Mr. Anderson recognize that developers face pressures of their own, including potentially from their own lenders. Each acknowledged that they are not lawyers, but they’ve been working with presales for years and believe these kinds of lawsuits are pretty open-and-shut.

“I’m not a lawyer, but my understanding is the case law is very clear,” said Mr. Stewart. “At the end of the day, these are contracts. When one breaks a contract, there are hundreds of years of precedent. And a lot of these people are finding out.”

Reviewing some of the cases for The Globe, Mr. Anderson said he was surprised that the developers were able to resell the units at the price they got, in some instances, as the prices were above current market rates. He suspects there will be more of these lawsuits.

In the cases reviewed by The Globe, the developers are seeking court judgments against the purchasers in amounts ranging from $70,000 to $166,000. Mr. Anderson says it’s unlikely the purchasers have much legal ground to stand on and will likely be on the hook for the full amounts, barring compassion and leniency from the judge.

“This is the quiet downside of presale that nobody wants to talk about, but it’s a contract,” said Mr. Anderson. He added that Magnum has worked with several purchasers who have brought in lawyers trying to get out of their purchases. “I haven’t seen this since 2010. Everybody wants to buy presale when the market is going up, but nobody wants any part of it when it’s going down.”

word to the wise.

drive and then walk around the area. its the only way you will get an idea. make the drive during what would be your commute so you know what itd be like. everyone on reddit has different opinions.

ans for budget, just ask your realtor to send you the last five homes that SOLD (not listed price) within your budget in a given area, so you can visualize how much house you can get.

What do you think ?

The condo market has crashed and developers, despite pleas and government incentives, have not been able to kick-start new construction, leaving the city headed for a housing supply crunch in just a few years. 

One of the biggest hurdles is the need to sell a majority of the units before a shovel even hits the ground — a model unique to Canada.

For more than 30 years, lenders have required developers to sell a portion of condos before they’re built in order to obtain construction financing, with the threshold inching higher and higher to today’s standard of 80 per cent of a project’s condos being presold.

As condos take around five years to build, presales typically attract investors who bet on the value of the unit rising before closing. But with prices falling, those buyers have fled the condo space and presales have hit record lows, making that 80 per cent target near impossible for developers to hit.

Industry leaders say it doesn’t have to be this way. Most cities around the world — Paris, Tokyo and New York City, to name a few — are able to build condos without preselling them. Toronto just needs to take the first step.

The transition away from presales will be a gradual process, said Benjamin Tal, managing director and deputy chief economist at CIBC Capital Markets.

But he firmly believes that in 10 years from now, “the (condo) financing model will be very different than it is now.”

How we got here

After the 1990s real estate market crash, lenders began requiring presales for condo developers to protect themselves against financial risk. Buyer deposits acted as secured financing, ensuring there was some cash already in the project on top of a developer’s own capital.

“The presale requirement is unique to Ontario, post ‘90s. It was just a way to protect banks, to protect their risk,” said Jasmine Young, vice-president at Zonda, a U.S.-based real estate data firm with Canadian operations. 

Young said when she started in real estate in the early 2000s, the presale requirement was around 50 per cent, which would take about 12 months to meet. 

Presales would occur in a phased approach. First, developers would hold a private event for friends and family, who would be offered the biggest discount. Then there would be big catered events for brokers where the bulk of sales would happen, followed by a grand opening for the public. Penthouse sales would typically be saved for the end, Young added.

But as land costs, interest rates, construction costs and building height kept mounting, the money needed also grew, resulting in lenders seeking a greater portion of the project to be presold, Young said. 

In the mayhem of the pandemic feeding frenzy, hundreds of units would presell in just a few hours, she added, making the current 80 per cent threshold easy to reach. But now, in the condo crash, meeting that target is near impossible. 

Build first, sell later

Experts say investors aren’t expected to come back any time soon, igniting conversations about alternative financing. The model they most point to is to sell condos after they’re built.

With investors out of the picture, developers are courting end-users — buyers who want to live in the units. The problem is, they don’t buy preconstruction as on average it takes five years for a condo building to be built, and families can’t wait that long, said CIBC’s Tal. 

“The model will have to change,” he said. “I think you will see more and more developers building on spec — namely, you build and then you sell. The way it is basically in the rest of the world.” 

Pouyan Safapour, president of Toronto-based real estate developer Devron who’s been advocating for switching to the build-first model, said selling units after they’re built ensures the developer is more connected to what an end-user wants.

Typically, these buyers want bigger apartments, not the shoebox condos favoured by investors due to their lower carrying costs.

Safapour said catering to end-users’ needs means the quality of the product is more “high value” because the supply is dictated by people who want to live in the unit, not rent it out.

How to ditch presales

Transforming the condo financing model requires banks and other lenders to take on more market risk, and for developers to put more equity into the projects, Tal said.

“Banks or lenders will have to take on a bit more risk, and how much would a lender be comfortable financing? The focus will be on the well-capitalized developers, it will be from relying on deep relationships … the banks will have to make sure that they trust the project,” he said.

Kari Norman, senior economist at Desjardins, said developers could partner with institutional investors such as pension funds or real estate investment trusts (REITs), which would allow the developer to put more money upfront to satisfy lender requirements.

“Lenders don’t want to take on all the risks. So if presale condos aren’t mitigating that risk, then developers need to look at other alternatives,” she said. 

The federal government could also offer loans through the Canadian Mortgage and Housing Corp. (CMHC) as it does for purpose-built rental projects, which has been a boon for condo developers pivoting to rental. 

If CMHC guaranteed a portion of construction financing, “it could help mitigate the risk to lenders when there’s a lower share of condo presales,” Norman said, adding that in that case “I could definitely see that being reasonable to have some kind of requirement in terms of more affordable housing within that project.”

Already, developers are creating more products that people want to live in through bigger units in purpose-built rentals.

“Quite frankly, if you look at what’s happening in the condo market, it is going through a major shock,” said Tal, “and you cannot have this kind of shock without a change.”

Peter Tulip is Chief Economist at Centre for Independent Studies (Australia). Ex-RBA, ex-Fed. https://www.cis.org.au/person/peter-tulip/

Relaxing the zoning rules is a strict no-go in Toronto, almost the epicentre of Canadian state-sponsored housing ponzi scheme.

Olivia Chow's Toronto City Council and Doug Ford's PC Govt and Mark Carney's Liberal Govt will hold hands, sing Kumbaya and shed crocodile tears over affordability rather than doing one meaningful thing: Stop being such bootlickers of these Toronto Resident Associations and relax zoning rules to allow gentle density.

Toronto resident associations submit open letter opposing sixplexes

I'm looking for some opinions on two areas I might be able to move to, any helpful advise/opinions would be appreciated! I don't normally visit these areas so I don't know many people there so just looking for general perspectives on safety/crime/family-friendliness/etc.

1. South of Colonial/McCowan Park
2. The block west of Scarborough VIllage Rec Center

On a map: https://i.imgur.com/ufvn3sC.jpeg

Thank you