What’s going to happen to people who bought half- or unbuilt condos now that the economy’s tanking?
Dear Urban Decoder: What’s going to happen to people who bought half- or unbuilt condos now that the economy’s tanking?—Jen Hillard, Yonge and Eglinton
As the North American capital of in-development condo towers, Toronto’s vertical real estate scene seems particularly poised for a rude awakening, and buyers who have slapped down hefty deposits on boxes in the sky are justifiably feeling a little freaked. The good news: so far, not one of the city’s 300-odd condo projects has folded due to the bum economy. Many, however, have had to adjust. Michael Gold, the developer behind the much-hyped 1 Bloor East, was forced to find new funding partners after Lehman Brothers went belly up last summer, and a handful of projects with direct exposure to failed U.S. lenders have been caught in similarly precarious positions. If a project does shut down (not that we’re tempting fate), a buyer’s deposit is generally protected up to $20,000 by the builder’s insurance, but most condo contracts also include a clause allowing the developer to halt or alter a project that no longer stands to make money, provided buyers get back their investment plus interest. The condo gods giveth, and the condo gods taketh away. If you want security, buy a bungalow.