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During last year’s first quarter, the housing market was full of highs and lows—that is, highs for sellers and lows for buyers whose new purchases depreciated in the blink of an eye.
Buyers in a Mattamy subdivision in Oakville called Preserve were among the latter when they purchased in February 2017 only to watch the Fair Housing Plan quash any appreciation they hoped to ride. In tandem with the B-20 mortgage rules requiring buyers to prove they can endure a 200 basis point interest rate hike, the buyers feel hopelessly hamstrung by a series of what they called irresponsible government intervention.
“We’re not investors. We purchased homes to raise our children,” Shahina Khan, who, with her husband, purchased one of the Preserve houses. “If the government wanted to implement cooling measures, why was it so reckless? Why did they not stop and think about the families that were in the middle of a transaction.”
“It’s not something (the government) could have forgotten about. It’s something they dismissed,” she added. “There’s some level of accountability with everybody and nobody’s stepping up.”
Unable to recoup their money on the resale market, nor able to secure a favourable mortgage, the group of buyers have called on the government, banks and homebuilders to conjure a solution.
But as Brad Carr, President of Mattamy Homes, told the Toronto Star’s Tess Kalinowski, while he’s sympathetic to the buyers’ plights, their contracts are binding for a reason.
“When a homebuyer makes a firm and binding decision to Mattamy to have us build them a home, we in turn take that promise, that commitment, and we make a whole series of promises to our trades, to our suppliers, to our employees about what now we can do on the strength of those firm contracts to employ them,” he said.
The Star spoke to three couples, all with children, whose houses were purchased for between $1mln and $1.6mln, and if they walk away from their contractual obligation with Mattamy, their deposits will not be refunded and they could get sued by the builder.
The Star also reported that Mattamy refuses to grant the buyers leniency.
The buyers also told the Star that if they secure financing through the alternative lending channel, they will be incapable of paying their monthly bills.
Carr also said that the Preserve buyers’ quandary isn’t unique—countless others throughout the market have been felled by similarly bad luck.
“The individuals who signed up for these houses … did so with full understanding of where we were in the full housing cycle, in the same way anyone else would,” he said, adding that there was extensive media coverage of the heated housing market around the time the buyers purchased.
“You also have to remember we’re talking about price points and a type of housing that are right at the top end of the band.”
The unfortunate story highlights the perils of trying to time the market, as well as the pressures people feel about being priced out. It also elucidates how, even in a bid to spur affordability, government policy decisions sometimes leave casualties in their wake.
Article written by Neil Sharma and reproduced with permission.