Should I plunk down $400,000 on a CONDO that has not been built yet ??

WOW, the CONDO market in Toronto Canada is HOT, HOT, HOT !!
I've seen over 200 people waiting in line for the lucky opportunity to be one of the few people to put down $400,000 or more on a Condo purchase, sight unseen, on a building that hasn't even begun yet. The earth hasn't even been turned on the building site. Talk about pre-selling or what!
Anyways, I've been told that this is the steal of the century and that I had better hurry up and put my 30% down cause the units were selling fast and I didn't want to risk losing such a great opportunity.
But I need to ask, with the housing slowdown in the USA happening, how long with the Canadian market keep skyrocketing ??
Additional Details
There are programs on Canadian television stations about how there is a "CONDO CRUNCH" here, with demand far outstripping supply. Almost like a buying frenzy.

The developer relies on getting presells to make the project work, but there's certainly risk there. If you are not planning for this to be your primary residence, then it is a speculative move. Do not assume that there will be a market for the condo, at a higher price, when construction is complete. Many condo buyers in Florida are walking away from their 20 to 30 percent down payments because the value of the condos have gone down by more than that amount during construction. If Toronto condos have been appreciating rapidly, they will likely experience a similar correction at some point. Good luck to you.

Pre-sales are often a hype. They try to get more then the market price, but tell you it is below market. Your best bet, especially at this time, is to wait till they are all sold and then see what the market price is.
I am not familiar with the real estate situation in Canada, but like in the US a few years ago, you may be in a real estate bubble now. Be careful!

Is the property discounted in any way? They want you to put down the 30% not because its the steal of the century but because they need the money to build them. Of course i do reccomend property investment but dont be potentially fooled by hype surrounding the development. You might well be onto a winner but do big reseach before you part with any cash

Putting money down on condo's or houses that are not built yet is a huge risk. Here where i live, we put down money on a house in a new subdivision. They had promised neighborhood swimming pools, parks, and other "bonus" items but have yet to build any of that 3 years later. Plus they overbuilt and now in order to sell the rest of the homes they have reduced prices on the homes which caused the housing market in my neighborhood to go way down. If I were you, I would put the money down on something that is already built, that way you get EXACTLY what you pay for.

hows this i live in florida near tampa codo started at 250. before it wasnt done they where selling them first about 30 percent was sold on completion they dropprd down to 180 i waited still thought i lost but those who where greedy and wanted it paid for it will they make their money up yes in time but its slow right now in fl

Look into this guy's record. Is he shady? Is this a first time out? If something seems too good to be true, it usually is.

Seems insanely high to me, but then, I live in So. Calif.

Sounds shady. Are there any guarantees that protect you, the buyer?

It doesn't sound like a good idea to me. I bought my house - a new construction - before construction even started. They only wanted $10,000 US up front because they knew they wouldn't have any problem selling it if I backed out. If these people want 30%, it sounds very fishy to me.

Real estate is always a good investment. Make sure that the unit is going to sell out first. If you plan it use it as an investment, wait until the building is sold out and then put it back on the market once the building is close to completion.

Do not pay a condo that's not even build yet. Here in the Philippines, a handful of people are duped by a company who promise to finish the condo but they didn't.

if you have doubts then follow your gut and the answer is no

Look, those kind of deals have been great over the last few years, but the U.S. is in a giant financial slow down. That slump will affect the Canadian market. Hot markets can turn ice cold over night. I think the risk is to high... but that's just me.

A Tale of Condos in Two Cities [with apologies to Charles Dickens]

Down in San Diego, CA [USA] two of our closest friends jumped onto the condo pre-built bandwagon and bought a unit in a high rise being built downtown. It has views of San Diego harbor and the whole nine yards.

Off to the East, a guy I know and his wife also jumped onto the condo pre-built bankwagon in Miami, Florida. It too is a high-rise and has views of the bay and harbor.

One couple is very happy with their purchase. The other is suing the developer, who is suing them because they've refused to complete the purchase.

What makes the difference?

The couple in San Diego bought into the first such project that came along after several years of no downtown construction. Their project is complete, full of happy owners and tenants, and the value of their property is up over 35% from their purchase price.

The couple in Florida bought into the 8th or so such project proposed in their city after several years of no downtown construction. Despite the entire project having sold out in the pre-built sales phase, there has been trouble since week seven of the 5 year project to build it.

By the time construction actually began in Florida, there was a construction boom [no such in SD when that tower's construction began]. A construction boom means that there is a shortage of workers and wage rates have begun to go up. A construction boom also means that the cost of concrete and steel have gone up and will continue to go up.

Ah -- developer pre-sold at fixed prices but when construction went to start, costs were over 20% above his plan. So he made a few changes to cut costs on the project. The changes were not well received by the buyers, who claim [and at least partly rightly] that the changes alter the character of the project and reduce the size of a significant proportion of the units. Those buyers therefore claim in their lawsuits that developer isn't/didn't build what they were promised and therefore they can't be held to the contract, or are due significant price reductions, or both.

Of course, developer has built the building now and spent the pre-construction deposits. [Florida law does not require them to be escrowed pending closing the sales.] So he doesn't have the money to refund deposits.

Worse, so many condo units came onto the market, and are still being built [it takes two to three years minimum to build these towers] that prices in the market have collapsed.

when prices collapsed, many of the investment buyers realized that if they could only get their money back from project G they could now buy a similar unit in project H for 30% less total dollars. So they're trying any legal tactic at all to escape the contract with project G and get their money back.

***
Thus, a Yank's caution to you:

has a building boom begun in Toronto already? Will the market be overbuilt by the time your project is finished?

if it is, what will be the real level of rents you command in that market?

Will the project be completed exactly as specified, or will the developer have to cut corners to come out alive? Will his cost reductions reduce the value of the project?

What happens if interest rates in three years are higher than you expect? [I know that mortgage loans in Canada are all variable rate loans.] How long could you survive if rents are lower than you expect and interest rates are higher?

***
If Canadian sales laws are anything like US laws, anything the salespeople say is NOT part of the contract. They can thus claim "steal of the century" and all sorts of other talk without any liability if it proves to be the case that the stealing was done by the developer on you instead of you on the rest of the public.

***
Both San Diego and Miami have severe land development restrictions which tend to force prices up because there is almost nowhere that new buildings can be put up. It would seem to me that this is not the case in Toronto -- you're not hard by the ocean and trying to build on a narrow strip of land with unbuildable something [mountains or swamp] behind it.

It may just be that Toronto will never be subject to the upward pressures on prices that happen in Miami or San Diego [in both cities, the depth of buildable land from the ocean is less than 30 kilometers].

does this make any sense?

no with realtstate today I myself wouldnot

How about you give me 100,000 of that so I can buy a home where I live?? No? Alright, well, good luck with that expensive-overpriced condo!

Wait!! Before You Do That. I Have A Better Offer For You. I Will Sell You The Brooklyn Bridge For HALF The PRICE....

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