Condos are the latest victim of Ontario’s housing market correction.
With the Bank of Canada (BoC) raising its overnight lending rate to 4.25% in December, condo buyers are right to be nervous.
What it means for buyers of preconstruction condos is something else.
2023 Prognosis for Canada’s Housing Market Correction
Condo sales dropped 10% between August and September at national realtor Re/MAX. Amidst the BoC’s seventh rate hike in less than a year, that’s the lowest point condo sales have been at since 2002.
Canada’s housing market correction is definitely cooling Ontario condo prices, and that’s expected to continue into mid-2023. Fortunately, market analysts point out the BoC has changed how it describes its plan to collar the country’s 6.9% inflation rate.
That’s how much the cost of an everyday basket of goods and services, like food, clothing, shelter, and transportation, has increased in the past year. It compares to 3.4% for 2021.
Analysts currently believe the BoC is in wait-and-see mode. Read what economists are saying about where Canadian interest rates are headed.
For variable rate mortgage holders, it’s more stressful news. With trigger rates looming (the point where homeowners pay more monthly for interest than principal), decisions about whether to sell or change to a higher interest rate with a closed rate mortgage could be ahead. Red flags when buying a condo in Ontario.
What’s Happening with 2023 Condo Prices
Overall, GTA housing prices could drop in the first half of 2023 by around 11%. As interest rates and unemployment rise, a continuing housing market correction will capture condo sellers and buyers.
Re/MAX predicts declines in residential sales prices of two to 15 per cent in Ontario. But with 60% of Canadian home sellers planning to hold onto their property, shrinking supply could amp up prices in some markets. More red flags in condo documents.
Ontario Cities With Highest Home Values
Ontario communities with the highest home values, like the Kawarthas, Durham Region, Georgian Bay, and the GTA, could suffer declines once again. That might leave places like Hamilton-Burlington, Sudbury, and Ottawa, which saw the biggest drops in 2022, to catch a windfall of buyers abandoning pricier markets.
Predictions there are for two to eight per cent price increases in 2023. And after peaking in February 2022, then dropping by 6% overall for 2022, GTA home prices were on the rise in October through December. Are new construction homes cheaper?
What the Housing Correction Means for Preconstruction Condos
The up and down nature of Ontario’s real estate market is problem laden for preconstruction condo contract holders. Cooling markets mean speculators may be out of luck if they planned to flip their contract through an assignment sale. Are assignments for sale a wise investment in changing markets?
Not only are assignment sales harder to market — they may not make it onto the MLS — but developers can balk at allowing contract holders to sell preconstruction condos before they take possession. Check preconstruction contracts before assuming assignment sales are allowed.
Broker Pocket reports assignment sales for preconstruction condos have shrunk. Buyers are holding out for better interest rates, while sellers are up against the wall with few buyers and the day they have to take out a mortgage closing in on them.
Best tip: talk to your realtor about whether to hold and sell your unit as a resale condo, or weather a drop in profits by selling preconstruction condos in a housing correction.
Why You Need a Real Estate Lawyer
Axess Law closes the sale whether you buy or sell preconstruction condos. Call us when you need a low, flat fee real estate attorney to review the agreement of purchase and sale (APS) or negotiate with a seller’s lawyer. Why you need legal advice when making assignments for sale.
Conditions in your offer to purchase may bind you legally to contractual terms you are unfamiliar with. Your Axess Law real estate lawyer goes over the fine print to protect your right to cancel by mutual consent or withdraw your offer if a home inspection goes poorly. Wording home inspection clauses in the offer to purchase.
We can connect with the seller’s lawyer to amend agreements and advise you on when to walk away. If your APS is irrevocable but you can’t complete the transaction due to finances or a sudden relocation, your Axess Law real estate attorney explains your legal options. Questions to ask real estate lawyers.
Mortgage financing delays can hold up your purchase or sale. Our professional team of real estate lawyers liaises with your bank, trust account, credit union, or private lender to finalize mortgage documents by your sales completion date.
We add title insurance to the transfer of title to ensure your home is protected from glitches like clerical errors. A small, one-time title insurance fee preserves your homeowner rights if a fraudster attempts to use your home to secure a mortgage.
Your Axess Law real estate lawyer checks for financial claims or construction liens at the same time so that registering the title in your name goes smoothly. Prevent title fraud from damaging your credit.
Affordable Real Estate Lawyers, Anywhere You Are
Access lawyers for less in the Greater Toronto Area, Ottawa, or anywhere in Ontario when you buy, sell, or transfer property. Axess Law’s flat fee real estate lawyers are affordable, and our rates are all inclusive (excluding taxes, disbursements, and third-party charges). Axess Law offers you only the legal services you absolutely need. Your final invoice includes no surprises or hidden charges. Your itemized statement of adjustments is explained when we deliver it, and we answer any questions you have about it.
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Hire an Axess Law virtual lawyer for online video calls 7 days a week, anywhere in Ontario. A licenced real estate lawyer can meet you in person at any of our conveniently located Greater Toronto Area or Ottawa law offices. Make day or evening appointments that fit your schedule by booking online. It’s easy with our online web booking form. Dial our 647-479-0118 lawyer line in Toronto (toll free to 1-877-402-4207) to speak with a live operator.
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