Mattamy Homes Buyers Protest For Losing Their “Investment”
Buyers of pre-construction houses from Mattamy Homes protested at the homebuilder’s Dundas Street West sales office on Saturday, saying the firm should act on the falling value of home prices causing them to lose their investment on houses they bought at market’s peak.
“Mattamy is undercutting us. They are making it impossible for us to close the deal,” said Brampton lawyer Ajit Saroha. Last February, he and his wife purchased two homes in Mattamy’s Preserve West development for their family. They paid around $800,000 in deposits on the two residences, which cost $2.46 million apiece.
Dozens of people who thought they were purchasing their dream houses in two Oakville housing developments early last year, when the real estate market was still hot, say they never expected property prices to plummet so low or loan rates to soar so quickly.
Now, Mattamy Homes is selling the same type of pre-construction houses in the same locations for hundreds of thousands of dollars less – a move that the buyers claim is compromising their already precarious financial situation.
They claim they are facing financial ruin since their bank evaluations fall considerably short of the price they agreed to pay for their homes last year, creating a huge gap in the financing they will receive when they close on their homes later this year.
Saroha is considering walking away from the money, but he is afraid that the corporation will sue him if he does not fulfill his end of the bargain.
“We are in a desperate situation. We are prepared to lose what we have to lose but it will be a big, big financial devastation for most families in that community,” Saroha said.
Even without the difference between what they bought and the current appraised values, the buyers believe falling property prices mean they won’t be able to sell their current homes for what they expected last year, and their mortgages will be more expensive.
Saroha isn’t sure who he blames more: the builder or the Bank of Canada, which raised its key lending rate eight times between March and January after saying in 2020 that rates would likely remain low until 2023.
The company stated that it has no control over real estate market swings and that it expects buyers to honor the commitments they signed.
“Neither party signed on to the terms and conditions of the agreement of purchase and sale for a new home lightly. The agreement is legally binding on both parties. While Mattamy works with our homebuyers to suggest resources and referrals to help them get their home closed, we enter into these agreements with the expectation that they will be enforced,” the company told the Toronto Star in a statement.
Brent Carey, vice president of communications at Mattamy Homes, emphasized that the company, like its clients, is a player in a dynamic real estate market that is currently slowing in both the new construction and resale sectors due to rising interest rates.
The excutive also noted that while prices may vary after the sale, “all parties are obligated to abide by the firm contract they entered into and the risks of market fluctuations they assumed.”
“Price reductions within Mattamy communities, including those in Oakville, are in line with the broader housing market,” said Carey’s email to Toronto Star. “Sales occur the moment the agreement is signed but home values routinely adjust over time as the market shifts.”
Many observers are noting how the “protesters” are taking it to the street for losing money in an investment for something that was caused by market headwinds, and not directly by the homebuilder.
Snags on the housing market have been widespread amid a rising interest rate environment which is aimed to tame the heating inflation. However, the latest figures show that new home prices across Canada aren’t showing signs of increasing, the latest indication the Bank of Canada’s aggressive tightening cycle is cooling housing markets across the nation.
READ: Canadian Home Prices Cool as Interest Rates Scare Buyers
US homebuilder KB Home reported a cancellation rate of 68% in its Q4 2022 financials–meaning around two-thirds of its orders backed out. Subsequently, it has unveiled its first virtual new-home community in the metaverse located in the Decentraland platform, complete with a three-dimensional welcome pavilion and with three architecturally distinct model homes.
READ: Is KB Home Trying To Overshadow Cancellations With Virtual Homes In The Metaverse?
Information for this briefing was found via Toronto Star and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
The Bank of Canada in an effort to curb rising costs and inflation has raised the interests rates to help us poor victims of the financial dynamics we have faced in this country. I’m sure people facing rising interest rates crippling their financial status and exorborent rising cost of living right across the board from groceries to fuel to hydro to pharmaceuticals feel so much better now. Thanks so much for looking after our best interests as a Canadian fall guy. The rich get richer and the poor get poorer.