Market changes hurt condo buyer
The drop in condo prices has turned into a nightmare for a Calgary buyer.
In 2007, Dany Cote put down $20,000 on a condo at London at Heritage Station. He also signed a presale contract to buy the property for $420,000.
Cote was pre-approved for the money and Canada Mortgage and Housing Corporation (CMHC) agreed to insure the loan.
But in the two-and-a-half years Cote had to wait for the condo to be built, the economy and the real estate market tumbled.
According to a recent appraisal, Cote's condo is only worth $335,000 and the CMHC will only insure a loan of up to $313,000.
"Typically, when a property is approved for CMHC insurance, CMHC does tend to honour that agreement during that period. However, there are times when an application is reassessed," says Richard Cho, a spokesperson for CMHC.
Those who fall into the reassessment category must pick up the slack of a hot market gone cold.
This means Cote must come up with the $84,000 shortfall.
"My wife and I aren't in the position to advance the money and get over the bad situation. We're just regular people trying to get by," says Cote.
On Tuesday, the builder sued Cote for breach of contract seeking both the $20,000 deposit and the difference between the presale contract price and the condo's current market value.
CTV News contacted the builder of London at Heritage Station and was told Cote is not alone. There are a significant number of buyers in the 369 unit complex saying they either can't, or won't, close on their condos.
"That puts us between a rock and a hard place because we obtained financing based upon those presale contract prices," says Phil Milroy, a spokesperson for London at Heritage Station.