Real Estate

Update on Cresford case?

  • Last Updated:
  • Oct 22nd, 2020 8:06 am
Tags:
Newbie
Nov 22, 2009
74 posts
70 upvotes
Vancouver
StatsGuy wrote: what's ridiculous? concord paid much higher price than cresford for the property and taking it on to completion. they don't/didn't have to offer anything. Not like Concord paid a discount for it.

alternative is nobody buys the existing project/buyers and purchasers get their deposit back and thats it as Cresford is done. at least now buyers get a choice to keep their units and get a slight discount off FMV or get 3% interest on their deposit and walk away.

this is way better outcome than any other purchase including ground related housing where deposits are gone too
Rewind yourself to 2016, where the buyers chose this project because of this developer Cresford
They could have gone with hmm Tridel, Great Gulf, Daniels, Menkes, Pinnacle basically any other downtown projects launching then and avoid Concord

4 years later while the other projects around same pricing get to current market value, they now lost that value up and getting 3% lol

Sucks for these buyers :(
Deal Addict
Dec 20, 2018
3968 posts
3185 upvotes
RolandCouch wrote: Entirely due to Cresford and I'm speaking to a bigger problem in the industry. Remember the projects in Vaughan? Builder did not go under just cancelled the project, rebranded and repriced it and the buyers got screwed.

But back to this case their needs to be better protection for buyers. 3% is a slap in the face.
Deposit is held in escrow and protected.

I don't see any protection that will help except maybe builder required to buy insurance at sales stage so if they go under , insurance pays to complete it (like a construction bond) but no insurance will insure that without some insane premiums that will of course be passed on

What you're asking for is like protection for stock buyers not only for their principal but gains as well

I mean so purchaser/investor bear no risk but instead guaranteed gains? Buying preconstruction is an investment and there is risk/reward vs resale (lower deposit, longer payment period and don't need carrying cost during period from purchase to completion), so of course the purchasers need to bear risk as well. It's already stacked for purchasers as they can't lose their deposit while the builder can go bellyup

This isn't some door to door high pressure scam. Purchasers get deposit guaranteed and are given 10 days to have the terms of the agreement reviewed by their own lawyer who gives them legal advice on the risks and terms. So I don't see what more should be done as anything more is the govt guaranteeing capital gains and insuring construction costs?
Last edited by StatsGuy on Oct 21st, 2020 6:18 pm, edited 1 time in total.
Deal Addict
Dec 20, 2018
3968 posts
3185 upvotes
vbomb wrote: Rewind yourself to 2016, where the buyers chose this project because of this developer Cresford
They could have gone with hmm Tridel, Great Gulf, Daniels, Menkes, Pinnacle basically any other downtown projects launching then and avoid Concord

4 years later while the other projects around same pricing get to current market value, they now lost that value up and getting 3% lol

Sucks for these buyers :(
So? Much like someone could've bought tesla stock instead of suncor in 2016 and have very different outcomes

Just like it sucks for shareholders of suncor and cruiselines
Deal Guru
Jun 26, 2011
13567 posts
3656 upvotes
GTA
StatsGuy wrote: What you're asking for is like protection for stock buyers not only for their principal but gains as well
It isn't at all what I'm asking for. If they got their units as agreed to and prices were down 100K, they would have got what they purchased but be in the red to the tune of 100K.
StatsGuy wrote: It's already stacked for purchasers as they can't lose their deposit while the builder can go bellyup
Comical that you actually believe this. The deck is clearly stacked in the favour of the builder. Always.
Deal Guru
Jun 26, 2011
13567 posts
3656 upvotes
GTA
StatsGuy wrote: So? Much like someone could've bought tesla stock instead of suncor in 2016 and have very different outcomes

Just like it sucks for shareholders of suncor and cruiselines
Except the difference here is that the buyers of Suncor shares or Carnival shares actually got and still have those shares.

Buyers here got a 3% GIC when they purchased a home.

I'm totally unaffected by this, but I think it's bs.
Deal Addict
Dec 20, 2018
3968 posts
3185 upvotes
RolandCouch wrote: It isn't at all what I'm asking for. If they got their units as agreed to and prices were down 100K, they would have got what they purchased but be in the red to the tune of 100K.
Buyers agreed to the terms which include cancelation of project as well as for completion. So you're saying only certain terms should be guaranteed to fulfilled somehow but not all? Wow
RolandCouch wrote: Comical that you actually believe this. The deck is clearly stacked in the favour of the builder. Always.
So you're back to cresford is better off than buyers ?
Deal Addict
Dec 20, 2018
3968 posts
3185 upvotes
RolandCouch wrote: Except the difference here is that the buyers of Suncor shares or Carnival shares actually got and still have those shares.

Buyers here got a 3% GIC when they purchased a home.

I'm totally unaffected by this, but I think it's bs.
And purchasers got their deposit back , and they are way ahead than suncor or carnival shareholders who actually have a loss . Only way carnival and suncor shareholders are same position as the purchasers are if the current stock price is same as in 2016

If a cresford purchaser put down 100k in 2016, they'll have option to get back 100k+3% interest (not sure if compounded) or buy into new builder with a discount

Whereas a suncor or carnival shareholder who put on 100k in 2016, will have option of losing 70k now or hold on for potentially even more losses

The worse outcome for buyers is getting 100k+ interest, whereas a suncor or carnival shareholder option is losing 70k now or waiting indefinitely and worse outcome is losing all 100k
Deal Guru
Jun 26, 2011
13567 posts
3656 upvotes
GTA
StatsGuy wrote: Buyers agreed to the terms which include cancelation of project as well as for completion. So you're saying only certain terms should be guaranteed to fulfilled somehow but not all? Wow
Which highlights my point that these contracts are clearly stacked in favour of the builders. Project doubles in value, they can find a way to cancel/rebrand/re-sell

Examples:

https://globalnews.ca/news/4518859/vaug ... oup-condo/
https://www.thestar.com/news/gta/2019/0 ... -site.html
https://www.thestar.com/business/real_e ... awful.html

We've yet to see what will happen with Cresford, but it doesn't take much of a long back to see how well a developer can do in a bankruptcy scenario:

Urbancorp:
https://financialpost.com/personal-fina ... heir-homes
Newbie
Nov 22, 2009
74 posts
70 upvotes
Vancouver
StatsGuy wrote: So? Much like someone could've bought tesla stock instead of suncor in 2016 and have very different outcomes

Just like it sucks for shareholders of suncor and cruiselines
Stocks are different, you own the stock after you buy it and there is way more liquidity than real estate.
If I did buy the stock I could have sold it before March, could have done all sorts of other things myself etc. it's not comparable to pre con real estate

This is a contract for the pre construction condo, which doesn't allow the owner to do much and doesn't give them alot of the same liquidity.
Completely different investment asset class.
Last edited by vbomb on Oct 21st, 2020 6:42 pm, edited 1 time in total.
Deal Guru
Jun 26, 2011
13567 posts
3656 upvotes
GTA
StatsGuy wrote: And purchasers got their deposit back , and they are way ahead than suncor or carnival shareholders who actually have a loss . Only way carnival and suncor shareholders are same position as the purchasers are if the current stock price is same as in 2016

If a cresford purchaser put down 100k in 2016, they'll have option to get back 100k+3% interest (not sure if compounded) or buy into new builder with a discount

Whereas a suncor or carnival shareholder who put on 100k in 2016, will have option of losing 70k now or hold on for potentially even more losses

The worse outcome for buyers is getting 100k+ interest, whereas a suncor or carnival shareholder option is losing 70k now or waiting indefinitely and worse outcome is losing all 100k
You're missing the point. The SU and CCL shareholders got what they purchased. They can sell it when they want or ride it out till it possibly recovers or becomes profitable.

You better believe that if the condo market tanked in a recession where labour and materials were even cheaper and buyers paid $1000 sq/ft and it was now worth only $600 sq/ft that those buildings would be up in no time with the buyers holding the bag. They absolutely do take on risk. In that scenario they are taking on the downside risk and in situations like Icona or Cosmos they are taking on the risk that when there is significant upside they get screwed anyway.
Sr. Member
Jan 5, 2020
557 posts
633 upvotes
I feel bad for first time homebuyers. But not so much for investors. Sometimes you win and sometimes you lose.

Top

Thread Information

There are currently 2 users viewing this thread. (1 member and 1 guest)

blackn54