a House is a Money Pit, and a Mortgage is a Death Pledge: a home for $605,000, with a deposit of $62,500? Ontario, Canada homebuyers stunned by extra $175K charge from the developer – August 15, 2022,
One of the reasons a person like me could NEVER be Premier of any province in Canada is because I’d be too brutally honest; I’d definitely be considered elitists, and before I could even think about getting anything done, I’d have cut all sorts of FEDERAL government programs, start with the selling off or RESTRUCTURING the Canada Mortgage and Housing Corporation(CMHC).
One of the mistakes Doug Ford made when running for RE-ELECTION was making promises regarding housing. Knowing what I know, I would NEVER make a promise, and Doug Ford was in a good position; you gave the Liberals and the NDP a good ole fashion shellacking, not because of anything he said, but because of what the NDP and Liberal leaders were saying, like locking people down, taking away their freedoms ruining their summer, likely presenting us with some lunatic health care leader that forced them to wear a mask everywhere they went.
Doug Ford would have been wise to say very little during his campaign, but now, regarding this housing situation, if I’m Doug Ford, I do NOTHING! Because this is a handful of people, and nobody put a gun to their heads and said sign this contract or else, these people can go to the courts and solve their dispute. Maybe set up a go fund me or something like that.
This is an UPPER-MIDDLE class problem that potentially found its way to the lower middle-class poor because the Federal government stuck its head where it doesn’t belong. First and foremost, I tend to forget that people aren’t putting 20% down on these mortgages. The person in the article I point to put $62,500 on $605,000 home?
At 10% $62,500 will get you a $625,000 home. Meaning that she should have put down $125,000 for this house, which would have been 20%. One of the reasons a lot of us don’t buy new builds is because of exactly what’s going on in this story, and this is why the FEDERAL government should have NEVER gotten into the housing marketing the first place, because during economic downturns, the people doing all the heavy lifting, want to be PAID, upfront, and if the middlemen in these transactions have no money projects will get stalled.
Now, I want you to seriously consider reading the CBC post below because this is the STUPIDITY that is allowed to exist in the Ontario housing market.
LeFeuvre originally purchased her home for just over $605,000, with a deposit of more than $62,500. She said the initial closing date was supposed to be Aug. 31, 2021, but Briarwood started sending out delay notices during the pandemic.
At the beginning of May, LeFeuvre received notice from the company informing her, that her home still wouldn’t be finished in 2022. She was offered a mutual release where their contract could be broken, and she would get her deposit back. LeFeuvre didn’t sign it — she and her husband just wanted their house built.
In July, the pair were called in for a meeting with Briarwood. LeFeuvre said they were presented with two options: either pay an extra $175,000 — nearly three years after they had initially signed their contract — or sign a mutual release form.
Did you read the above? This is why certain people SHOULD NOT be homeowners because I’m certain in the mind of “LeFeuvre” nothing bad could happen to her $62,500, which maybe she worked very hard for, but it’s called a housing MARKET for a reason. a lot of Canadians who are new to large purchases don’t understand RISKS involved in the market, this is why some people should be RENTERS.
When you read the story above and comprehend the THINKING of these people, you start to see HOW the government gets so large. One of the disagreements I have with Libertarians is that they focus on the central banks, whereas I focus on DEMOCRACY itself. There was a DEMAND for an ever-elastic money supply; there was a demand for a central bank because most people can’t handle the REAL world.
In the real world, you do your best to buy your home with ALL cash because situations like the one above will happen. Currently, there’s a LABOR shortage; now, for LeFeuvre, maybe when she was presented with the option to get her deposit back, she said to herself ” but I really, really want this house, and if I take my deposit back, I’m going to lose this house, and maybe the new purchaser will get the house I bought first, then the house will rise in value, and my $62,500 won’t buy as much house in the future.”
The story in the above paragraph was made up, by the way; I don’t know what LeFeuvre was thinking, but she was given a way out of the deal, and now that the deal no longer favors her, she wants to the GOVERNMENT or Big Brother to step in and do something about it. Now, why Doug Ford SHOULDN’T do anything is because there’s a LABOR SHORTAGE, and if this becomes the NORM, meaning that a developer short on cash knows his contracts mean nothing, meaning that future buyers, when presented with the new reality, can merely turn to the government to finance their RISK, the entire business model changes.
It’s these little events that make building costs even higher. Now, how this story is often framed is that the developers are being greedy, well, yeah, duh, nobody is in any business to be losing money, and I remember in the 1990s, prior to the CMHC creating all of these incentives, for low-income people to become homeowners, a lot of condos turned into rental apartments because the financing just wasn’t there.
That’s why I brought up the $62,500 for the $625,000 house. During a booming market, that wouldn’t be a problem, but during a period in which there are labor shortages, meaning that existing labor has the bargaining power to demand higher wages, you gotta pay up; it’s called a housing MARKET. If I’m helping someone I don’t know to build a house I won’t enjoy; I need to be paid in the here and NOW.
If your developer can’t pony up the money, that’s not my problem as the builder; my guys aren’t working for free; end of the story. In the post, yes, I’m guilty of OVER Simplifying this process, but in a nutshell, that’s what’s going on here. Although one group can argue that the developers are GREEDY, another argument could be made that LeFeuvre is greedy.
Many of us reading this are saying to ourselves, wow, that gave you the chance to pull out of the deal, and you said no? Being that I understand that it’s a housing MARKET, I’ll gladly SELL when the market is experiencing a downturn. If I buy a stock for $100 and the person who sold me stock says the market is experiencing a downturn, and I’ll give you back your $100.
Now, I might be skeptical about why he wants to refund my money, but unless I’m 100% certain the stock price will go up to $150, I’ll gladly accept my refund. Now, if it turns out that the stock does go up after my money is refunded, maybe I don’t like the salesperson anymore, but at the very least, I got my $100 back.
With LeFeuvre, she not only did not get her money back, but they’re also demanding more money upfront in order for her to purchase this UNBUILT home. Again, many of us know the risks involved in purchasing a home before its built. I’m sympathetic to LeFeuvre only because this problem with created by the Federal Government. This kind of stuff happens a lot; it’s a housing MARKET; sometimes, you buy a stock, and the price of that stock crashes; it happens.
It’s not the government’s job to protect you from market conditions; it’s not Doug Ford’s responsibility to make this woman whole. Now, the good strategy by the woman was getting people emotionally invested in her story, maybe this will pressure the company to give her back her money (“if that’s what she wants”), but it’s not Doug Ford’s job to make her whole.
One of the smart things Justin Trudeau does is, as an example, he IGNORES what’s happening at the airports because Liberals have to know only a SMALL fraction of voters travel. Not sure if Doug Ford is smart enough to comprehend that the average Ontarian, when presented with the facts, care very little about this upper-middle class problem created by the Federal Government.
So, in my opinion, the woman should do her best to pressure the company to get her money back, but Doug Ford should do nothing. Maybe he can make a small speech, but this is not important; I’m only writing this post because of the woman’s extremely low downpayment. I’m a personal believer that 20% should be the minimum or whatever the banks are okay with.
I might be a little clueless about this because I buy with cash and only use a small amount of debt for any purchase, and I seek to pay back my debts as soon as possible. When I see $62,500 deposit for a $605,000 house, I say to myself; I guess this person has NO desire to pay off their mortgage? A mortgage is, after all, a death pledge.
Interesting times ahead!