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Monthly Archives: April 2018

RBC Chief Sounds Alarm on Flood of Foreign Cash in Canadian Real Estate

Many Canadian Residents can’t qualify for mortgage to buy a home while the foreign investors enjoy profit in Canadian Real Estate Market. Full story below:

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  • ‘No thank you,’ McKay says to unproductive capital in homes
  • Intensive bidding is beginning to ease as prices stabilize

Foreign inflows are distorting Canada’s already constrained housing market and aren’t the kind of investment the country needs, the chief executive officer of Royal Bank of Canada said.

 “We do not need foreign capital using Canadian real estate as a piggy bank,”  David McKay, said Tuesday at a bank conference in New York hosted by the Toronto-based lender. “If capital is coming in to sit in a home, unproductively, and is distorting your marketplace and the livelihood of your residents — no thank you.”

McKay, whose bank is Canada’s largest mortgage lender, says he’s supportive of government taxes and other measures targeting foreign buyers, as well as other regulatory efforts to cool the country’s housing market. He’s seeing some impacts from these rule changes, with “a little bit more healthy dynamics.”

 “Demand is down and house prices have been stable,” McKay said. “There’s still intensive bidding, but to a lesser degree.”
Toronto, Canada’s biggest housing market, has been correcting over the past few months amid a slew of regulations put in place to steady booming prices and increasing debt. Toronto home sales fell 35 percent in February from a year earlier, marking the weakest month of sales in nine years, though benchmark prices were up 3.2 percent on the year, according to data released Tuesday by the Toronto Real Estate Board.

Added Gasoline

Canada’s housing market has been on edge this year as mortgage guidelines came into effect, making it harder for prospective buyers to qualify for loans.

A surge of foreign money into Canadian housing had been adding “gasoline” to markets in Vancouver and Toronto, McKay said. He identified a “cocktail of factors” that led to unconstrained growth of Toronto and Vancouver home prices, including a growing population, land constraints, lack of supply and highly stimulative interest rates that caused people to funnel more disposable income into their homes in addition foreign money.

Source: Bloomberg.com

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Posted by on April 15, 2018 in City of Toronto, Commercial Real Estate, Condominiums, New Announcement, New Condominiums, New Condos, New Construction, New Development, New Homes, Toronto Housing, Toronto New Condos

 

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A sold-out high-rise condominium project in the new Vaughan Metropolitan Centre is cancelled.

A sold-out high-rise condominium project that promised to deliver units to the new Vaughan Metropolitan Centre is the latest in a string of cancelled condo projects, leaving more than 1,100 hopeful buyers in limbo.

Vaughan condo cancelled

Cosmos Condominiums was announced by Liberty Development Corporation in 2013, began pre-selling condo contracts in 2016 and was supposed to start delivering units in 2019. This week, buyers received letters from Liberty saying the project was “challenged” by “unsatisfactory financing terms” and cited early cancellation language in the contracts and said it would return buyer’s deposits.

At the time of its pre-sale offering period, Liberty sold 780 units in the first two towers in 25 days, according to real estate analysts at Altus Group. The project was later described as “sold out” of its 1,153 units on the company’s web pages, which have since been taken down.

 It’s at least the ninth condo project to cancel in the last year in the Greater Toronto Area, well above the typical yearly average, according to condominium analysts at Urbanation. It’s also one of the largest developments in the region to vanish, compared with the 68-unit Kennedy Gardens in Scarborough (cancelled in January) or the 168-unit Museum Flats building (cancelled in October, 2017) in Toronto.

Still, it represents a tiny fraction of the total development plans in the region: at least 600 new residential projects are in various selling and planning stages across the GTA.

 Developer pre-sale agreements are strong contracts that typically allow them to cancel projects with few penalties and no obligations to former buyers if a project restarts later.

“We have recently learned that because of circumstances beyond our control and Liberty’s best intention, our project, Cosmos Condominiums, has been challenged,” reads the letter, signed by Liberty director of sales and marketing Shawn Richardson. “At this time, financing for the project on terms satisfactory to the Vendor cannot be arranged … It will force the project vendor to now cancel all Agreements of Purchase and Sale.”

The “vendor” in this case is the owner of the land, which is a numbered company: 1945086 Ontario Inc. Liberty spokespeople would not confirm the owner of 1945086 Ontario Inc., but the company is registered at the same 1 Steelcase Rd. address as Liberty Development Corp. and lists Feyedoon (Fred) Darvish as its president. Mr. Darvish is also the president and founder of Liberty.

Mr. Richardson, Mr. Darvish and CEO Latif Fazel did not respond to interview requests. In a statement, the company repeated its explanation from buyer’s letters.

The company didn’t explain what went wrong with the financing, but conditions for builders have changed significantly in the last 24 months.

When Cosmos launched in 2016, it was selling units for about $540 per square foot,according to Urbanation. More recent projects launched in Vaughan were able to fetch more than $700 per square foot, close to a 30-per-cent increase.

Construction costs have also been rising rapidly in the last 18 months, particularly among critical concrete-forming and window suppliers in the region, who are charging 30 to 50 per cent more than they were asking in 2016.

The buildings were to be erected on the corner of Highway 7 and Maplecrete Road, and units were priced between the mid-$200,000s and just under a million dollars.

“When my clients received this shocking news in the mail from builder they got heart broken, because this builder has their deposit and they didn’t invest in any other projects that launched in this area after Cosmos condos. They all planned out to move there in few short years in their first home. The dream that didn’t come true for them at this time. It literally kicked them out of the market due to higher condo prices and they will remain as rental tenant.”

 

Source: The Globe and Mail Inc., + nasim yusufi

 
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Posted by on April 7, 2018 in Condominiums, cosmo condos

 

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