According to confidential listings viewed by The Globe and Mail, one house is listed for 12 per cent below the $2.56-million price Mr. Khan agreed to pay the developer in 2022 – a discount of just over $300,000. The second one is listed 6.5 per cent above his $2.5-million purchase price.

About a month ago,Mr. Khan received a verbal offer for one of the properties that was $650,000 below the original value, according to his realtor, which he didn’t accept. Since then, no one has shown any interest in buying the rights to his sales contract.

With the developer, Caivan Communities, expected to finish construction this summer, Mr. Khanwill soon have to secure mortgages and take possession of the properties. He worries he can no longer afford to close on the deals – which would put him at risk oflosing his $700,000 in deposits. (Caivan did not respond to a request for comment.)

“My concern is, you know, what about my hard-earned money that I have put down for two homes?” Mr. Khan said. “I’m really worried now about what’s going to happen.”

Many preconstruction buyers across Ontario are in a similar predicament, especially those who bought between 2020 and 2022 when the real estate market was booming and preconstruction homes were selling at much higher prices.

In the past they could have negotiated a private sale – known as an assignment sale – before taking possession and closing on the properties. But that market is gone now as demand for new construction homes is drying up because homebuyers and investors can find cheaper homes on the resale market.

The assignment market gives preconstruction buyers – with a developer’s approval – a way to sell unfinished properties in private deals brokered by real estate agents. It used to be a thriving market where buyers turned an easy profit as home prices soared, and was often used as part of an investment strategy to flip homes before buyers were required to close on properties.

But while preconstruction homes are flooding the markets, buyers can no longer find people willing to take over their purchase contracts, and many can’t afford to cover occupancy fees or carry the mortgages if the sales close.

“Alarm bells are ringing,” said Jeff Carr, a realtor with Re/Max Plus City Team Inc., who said his brokerage has received calls from hundreds of preconstruction buyers inquiring about getting out of their purchase agreements. “A lot of people went into it blindly. There were a lot of agents out there that didn’t properly explain to purchasers what they were actually getting themselves into.”

He added: “I think for a long time, the market was so hot, and it honestly was quick and easy to sell assignments with a significant amount of profit that people just thought that train was going to continue to roll along.”

The situation is set to worsen this year with developers on track to finish building thousands of preconstruction homes in Ontario.

Even if buyers are willing to pay a premium for a brand new property, they face more hurdles with an assignment sale. That includes not being able to view the property in person because it is still under construction; additional fees such as the development levies and occupancy charges, which include the interest on the unpaid balance of the purchase price; and the fact that appraisers say the preconstruction prices of the pandemic years are typically 10 per cent to 30 per cent higher than today’s value.

“Why would a buyer come onto the assignment market if they can get the same on the resale market?” said Labeed Butter, a realtor who specializes in assignment sales under his company Assignment Pros. “Even though they are willing to lose their entries deposit, their properties are not selling because they are above market value,” he said.

Preconstruction sellers are not just at risk of losing their entire deposit, but also may have to pay more ifassignment buyers are not willing to pay anywhere close to the original price. It is up to the seller to pay the developer the difference between the original and assignment sale prices.

Ari Zadegan, who has worked on assignment sales for about 17 years, said this is occurring more frequently. Recently, her real estate firm TheZadegan Group sold a client’s preconstruction condo contract for 16 per cent less than the $886,000 original price. The client lost her $177,000 deposit and had to pay an extra $33,000 as she missed the closing date by two months because she was looking for a buyer for her contract.

Ms. Zadegan said the current downturn is longer than previous real estate slumps in 2017 and 2008 with price gaps now in the hundreds of thousands of dollars instead of tens of thousands.

Mr. Khan’s properties are privately listed with Ms. Zadegan. After six months and no real offers, Ms. Zadegan is hoping for some kind of compassionate resolution with the developer.

“We recognize that everyone is going through this pain. The builders did not expect this. The buyers did not expect this,” she said. “You’ve got to understand we are in unprecedented times.”

“You’ve got almost 96,000 units under construction, due to complete and deliver over the next three years,” in the Toronto-region according Fraser Wilson, a former senior vice-president with pre-construction sales experts International Home Marketing Group. It was industry standard that perhaps 20 per cent of those units went unsold when those projects launched between 2018-2022. Now though, his contacts in the industry are finding that the amount of unsold product is increasing as more and more buyers walk away from their purchase contracts.

“The developers are now entering a phase where consumers are saying ‘I’m not going to be able to close on this unit. Sorry, keep my deposit, seek legal action.’ We’re just on the forefront of that taking place,” he said.

It’s a phenomenon lawyer Mark Morris recognizes as he sees increasing numbers of clients coming to his Legalclosing.ca business looking for some kind of Hail Mary pass to keep them from defaulting on contracts that carry stiff financial penalties. In his view, the market is in the middle of the “pain cycle” of a real estate correction when first the buyers, then the builders and finally the lenders lose money.

“Lender pain is really not all that acute, and they’ve made provisions for losses,” said Mr. Morris. “Builder pain is becoming quite acute, they are looking at greater defaults. They are trying to pre-empt it by getting further financing proofs [including mortgage pre-approvals earlier than normal]. They are getting very worried about it.”

Real estate analysts note that consumer pain began as soon as interest rates began to rise, making existing mortgages more expensive and killing both the assignment market – a sort of condo futures marketplace where pre-construction buyers used to try to swap contracts that had seen some potential equity gains over time – and slowing the resale market down to where condo prices began to drop.

“Two years into the slowdown, it’s biting because builders are delivering,” said Pauline Lierman, vice-president market research with Zonda Urban. “People have talked about this for so long and now it’s happening.”

Builders are taking a varied approach to dealing with the issue. Large-scale builder CentreCourt Developments currently has more than 40 claims in Toronto civil courts demanding that preconstruction buyers who defaulted at two of its buildings repay any losses compared to the agreed price and the eventual resale price.

As an example of its standard legal claim, on Aug. 30, a CentreCourt holding company (Church Residences GP Inc.) filed for at least $534,767 in damages from a buyer who in 2020 agreed to purchase a unit on the 32nd floor of the condo tower at 199 Church St. Centrecourt’s filing states that when the unit was ready for occupancy in June, 2024 – with a new adjusted price that was about $70,000 higher – the buyer who had already paid a $136,998 deposit asked for a delay of one month before eventually defaulting.

According to listings on Condos.ca, a similar-sized unit one floor below is currently for sale at $1,183 per square foot, but over the summer another similar-sized unit priced at $1,358 per square foot on the 10th floor sat unsold for 142 days before the listing was terminated in late September.

Legal claims against buyers are still a relative rarity, but Mr. Morris warned that a lack of court action doesn’t mean builders are sleeping. They can sue now, before they’ve “crystalized” their loss through a resale of a defaulted unit, or they can sue up to two years after they take the loss. Many, he warns, are taking the patient approach.

In hotter market conditions developers were able to sell these units through real estate agents or even to established clients. But with Toronto’s condo resale market sitting at nearly seven months of inventory builders can expect these units to sit empty for months, creating a costly drag on balance sheets.

Mr. Wilson’s solution is to launch a new auction site – www.inventorycondos.com – to assist buyers and builders find the actual market price of unsold units, a process he acknowledges may result in some losses for builders.

“They have their bottom line, they have to achieve a certain price,” he said, noting that some recently completed units are still being marketed at prices per square foot far above anything moving in the resale market. “Anybody who’s got a calculator will not be able to make sense of the prices that are being sought.”

A recently completed site he’s already signed up to auction unsold units is 8 Haus at 2433 Dufferin St., Toronto by Royalpark Homes.

“We need to find each other somewhere in the middle, and an auction is the mechanism to do that. We have to move this unsold inventory in order to get the market balanced,” he said.

Buying a home is one of the most significant investments you'll ever make. To ensure you make the best decision, it's crucial to ask your real estate agent the right questions. Here are some essential questions to ask your agent to make the home buying process in Toronto smoother and more informed.

1. What Is the Current Market Condition?

Understanding the market condition helps you know if it’s a buyer’s or seller’s market. Ask your agent:

• Is the market competitive?

• Are homes selling above or below the asking price?

• How long do properties typically stay on the market?

2. What Are the Total Costs Involved?

Beyond the purchase price, there are other costs to consider:

• What are the estimated closing costs?

• Are there any property taxes or maintenance fees?

• What are the average utility costs?

• Does the home require any work such as replacement of the roof, air conditioning unit etc.?

3. What Is the History of the Property?

Understanding the history can help you avoid potential issues:

• How long has the property been on the market?

• Why is the seller moving?

• Has the property had any major repairs or renovations?

4. What Is the Neighbourhood Like?

Location is key in real estate. Ask about the area to ensure it meets your lifestyle needs:

• What amenities are nearby (schools, parks, grocery stores)?

• What is the crime rate like?

• Are there any upcoming developments or zoning changes?

5. What Are the Future Projections for the Area?

Knowing future projections can affect your investment:

• Are property values in the area increasing?

• Are there any planned infrastructure projects that could impact property values?

• How is the local job market?

6. Can You Provide a Comparative Market Analysis (CMA)?

A CMA will give you an idea of the property’s value based on recent sales of similar homes:

• What do comparable homes in the area sell for?

• How does this property’s price compare to recent sales?

7. What Is the Offer Process?

Understanding the offer process helps you be prepared and strategic:

• What is the best strategy for making a competitive offer?

• How much is the deposit?

• What conditions should be included in the offer?

• What other terms are placed in the offer?

9. What Should I Expect During the Home Inspection?

A home inspection is crucial to avoid unexpected issues:

• What are the most common issues found in homes in this area?

• How should I address any issues that arise from the inspection?

10. What Happens After My Offer Is Accepted?

Knowing the next steps helps you plan and prepare:

• What is the timeline for closing?

• What documents and information will I need to provide?

• How do I coordinate with the mortgage lender and other parties involved?

Conclusion

By asking these critical questions, you can make a more informed decision when buying a home in Toronto. Your real estate agent is a valuable resource, and ensuring you have all the necessary information will help you navigate the process with confidence. Remember, a good agent will welcome your questions and provide clear, comprehensive answers to help you find your dream home.

Introduction:

In the pursuit of financial stability and prosperity, real estate investment stands as a time-tested strategy that offers substantial returns and long-term growth potential. In the Canadian landscape, particularly in Ontario, the opportunities for building wealth through real estate abound. From bustling urban centres like Toronto to serene suburban neighbourhoods, the market offers a diverse range of options for savvy investors.

In this guide, we'll delve into the intricacies of real estate investment in Ontario, highlighting key strategies, tips, and insights to help you navigate the market and unlock its wealth-building potential.

Understanding the Ontario Real Estate Market:

Before diving into investment strategies, it's crucial to grasp the dynamics of the Ontario real estate market. Ontario, home to vibrant cities like Toronto, Ottawa, and Hamilton, boasts a robust and resilient real estate sector characterized by steady appreciation rates and high demand.

Key factors driving the Ontario real estate market include:

1. Population Growth: Ontario continues to experience steady population growth, driven by factors such as immigration, urbanization, and natural population increase. This influx of residents fuels demand for housing across various segments, from rental properties to single-family homes and condominiums.

2. Economic Stability: With a diverse economy encompassing industries such as finance, technology, manufacturing, and healthcare, Ontario enjoys economic stability, contributing to sustained demand for real estate assets.

3. Infrastructure Development: Ongoing investments in infrastructure projects, including transportation networks, schools, healthcare facilities, and commercial centers, further enhance the appeal of Ontario's real estate market.

Strategies for Building Wealth Through Real Estate Investment in Ontario:

Now that we've outlined the market dynamics, let's explore effective strategies for building wealth through real estate investment in Ontario:

1. Identify Profitable Markets: Conduct thorough market research to identify areas with strong growth potential, favorable supply-demand dynamics, and promising economic fundamentals. Focus on neighborhoods with projected appreciation rates and robust rental demand.

2. Diversify Your Portfolio: Diversification is key to mitigating risk and maximizing returns in real estate investment. Consider diversifying your portfolio across different asset classes, such as residential, commercial, and mixed-use properties, as well as geographically diverse locations within Ontario.

3. Leverage Financing Options: Explore financing options available including mortgages, private lenders, and partnerships. Utilizing leverage can amplify your purchasing power and enhance your overall return on investment (ROI), but it's essential to manage debt responsibly and factor in potential risks.

4. Implement Value-Add Strategies: Look for properties with potential for value appreciation through strategic renovations, upgrades, or repositioning. Value-add opportunities can significantly boost property value and rental income, resulting in enhanced long-term returns.

5. Adopt a Long-Term Perspective: Real estate investment is inherently a long-term endeavour, and adopting a patient, disciplined approach is key to realizing wealth accumulation over time. Focus on building a sustainable portfolio that generates consistent cash flow and appreciates in value over the years.

Conclusion:

In conclusion, real estate investment in Ontario, Canada, presents lucrative opportunities for wealth creation and financial security. By understanding the market dynamics, implementing sound investment strategies, and staying abreast of regulatory developments, investors can unlock the full potential of the Ontario real estate market.

The Bank of Canada (BoC) has announced its latest interest rate decision on June 6th, 2024, maintaining the overnight rate at 4.75%. This announcement holds significant implications for Canada's real estate market. Here’s an in-depth look at what this decision means for homebuyers, sellers, and investors.

Mortgage Rates

The BoC’s decision to keep the interest rate steady directly influences mortgage rates. While fixed mortgage rates are more aligned with bond yields, variable mortgage rates are directly tied to the central bank’s overnight rate. Here’s what to expect:

• Fixed-Rate Mortgages: Although the BoC’s decision does not directly change fixed mortgage rates, it signals stability which can maintain current rates. Fixed rates have been high due to elevated bond yields, but any signs of easing inflation could stabilize or lower these rates.

• Variable-Rate Mortgages: Borrowers with variable-rate mortgages will see no immediate change in their payments. However, with the rate remaining at 4.75%, these mortgages continue to be relatively expensive compared to the pre-pandemic era.

Potential Rate Changes

Economists will be closely monitoring economic indicators such as inflation and employment data. Any significant changes could prompt the BoC to adjust interest rates in the future, influencing the real estate market accordingly.

Introduction:

Welcome to the world of home staging, where the magic of presentation transforms spaces into irresistible showcases. In today's competitive Toronto real estate market, staging has become a great tool for sellers, especially when it comes to condos. Let's delve into what staging entails, why it's crucial, and how it can elevate your condo sale to new heights.

What is Staging?

Staging is the art of strategically arranging furniture, decor, and accessories to showcase a property's best features and create an inviting atmosphere. It goes beyond mere decoration; it's about creating a connection with potential buyers and allowing them to envision themselves living in the space. From enhancing curb appeal to optimizing interior layouts, staging aims to highlight a property's full potential.

Why is Staging Important?

• First Impressions Matter: Potential buyers form opinions within seconds of entering a property. Staging ensures that those first impressions are positive, captivating buyers from the moment they step through the door.

• Highlighting Potential: Empty or poorly furnished spaces can appear smaller or lackluster. Staging helps buyers see the full potential of each room, making it easier for them to imagine how they could utilize the space to suit their lifestyle.

• Stands Out in Listings: In today's digital age, the majority of home searches begin online. Professionally staged condos photograph beautifully, standing out in listings and attracting more views, clicks, and ultimately, potential buyers.

• Faster Sales: Staged homes tend to sell faster and at higher prices than their unstaged counterparts. By presenting a condo in its best light, sellers can expedite the selling process and maximize their return on investment.

How Does Staging Help Sell Your Condo?

• Creates a Memorable Experience: Staging transforms an empty space into a memorable experience for potential buyers. By incorporating stylish furniture, tasteful decor, and strategic layout designs, staging sets the scene for a compelling narrative that resonates with buyers long after they've left the property.

• Enhances Visual Appeal: Staging enhances a condo's visual appeal, making it more photogenic and inviting. From cozy living areas to inviting bedrooms, each staged space tells a story that captures buyers' attention and sparks their imagination.

• Maximizes Space: Condos often have limited square footage, requiring thoughtful design strategies to maximize space. Professional stagers excel at optimizing layouts, creating the illusion of more space, and showcasing the condo's functionality, regardless of its size.

• Emphasizes Key Selling Points: Every condo has unique selling points, whether it's breathtaking views, architectural features, or modern amenities. Staging draws attention to these key features, emphasizing their importance and adding value to the overall property.

Conclusion:

In the competitive world of real estate, staging has emerged as a game-changer for sellers looking to elevate their condo sales. By leveraging the power of presentation, staging transforms properties into irresistible showcases that captivate buyers' hearts and minds. From creating memorable experiences to maximizing visual appeal and emphasizing key selling points, staging sets the stage for a successful sale, ensuring that your condo stands out in a crowded market and fetches top dollar. So, if you're ready to unlock the full potential of your condo and secure a swift sale, staging is the ultimate solution you've been searching for.