neubilder
Banned
Pre-construction runaway train
At some point this frenzy of buying and building will lead to market saturation, if it isn't there already. Once this happens, your investment will depreciate even before it's built, if it's built.
Once market saturation occurs there are three scenarios:
1/ Best - the project in which you invested is cancelled due to poor sales before construction has commenced, and your deposit is returned.
2/ Painful - You close on an investment that is worth less than you paid, but you can afford to absorb the loss and hold.
3/ Tragic - you lose your deposit, get sued for damages and are forced to declare bankruptcy on a negative equity investment.
There are many projects presently under construction that still have unsold inventory. These units are priced better than those in many of the newly launched projects. If you must buy now, buy into projects already under construction, or buy resale.
In the pre-construction condo market environment, the construction industry has little exposure. Developers are immune to all but the most severe market corrections. Your 20% deposit is the developer's insurance policy. The builder will not be on the hook when investors lose their shirts. They will keep your 20% deposits and resell at the adjusted price. And maybe sue you as well.
Collectively buyers are fueling a runaway train.
At some point this frenzy of buying and building will lead to market saturation, if it isn't there already. Once this happens, your investment will depreciate even before it's built, if it's built.
Once market saturation occurs there are three scenarios:
1/ Best - the project in which you invested is cancelled due to poor sales before construction has commenced, and your deposit is returned.
2/ Painful - You close on an investment that is worth less than you paid, but you can afford to absorb the loss and hold.
3/ Tragic - you lose your deposit, get sued for damages and are forced to declare bankruptcy on a negative equity investment.
There are many projects presently under construction that still have unsold inventory. These units are priced better than those in many of the newly launched projects. If you must buy now, buy into projects already under construction, or buy resale.
In the pre-construction condo market environment, the construction industry has little exposure. Developers are immune to all but the most severe market corrections. Your 20% deposit is the developer's insurance policy. The builder will not be on the hook when investors lose their shirts. They will keep your 20% deposits and resell at the adjusted price. And maybe sue you as well.
Collectively buyers are fueling a runaway train.
Last edited: