It seems that every few months, a new story emerges from hot real estate markets like Toronto about a condo project being cancelled, leaving those who bought presale units scrambling to recovery their money and find another place to call home.
But what’s the situation in Calgary, and what recourse do buyers here have if a project they’ve purchased in is cancelled?
“The markets in big cities like Toronto and Vancouver are fundamentally different from Calgary,” said Chris Pollen, director of sales and marketing for Battistella Developments. “So a news headline that hits (in those cities) probably has really no real bearing here.”
Pollen says condo cancellations have happened in Calgary, but they are a rare occurrence.
He says typical prices for a condo in Calgary run about $500 to $600 per square foot, compared to $1,200 to $1,500 in a place like Toronto. As a result, developers in these higher-priced markets sometimes launch projects that are somewhat speculative in nature.
“(They decide) this is an up-and-coming area, or the overall market is strong, so we’ll gamble that prices will have appreciated by X amount to make the development work,” said Pollen.
“We do a lot of homework on our developments. Acquiring the site, understanding the market and price points, square footages, and who the buyer demographic is. We make sure if we say we’re going to build it, we build it.” – Chris Pollen, Battistella Developments
He says here in the smaller Calgary market, Battistella does its “due diligence differently,” determining what is realistic based on current prices and the state of the market.
“We do a lot of homework on our developments,” he said. “Acquiring the site, understanding the market and price points, square footages, and who the buyer demographic is. We make sure if we say we’re going to build it, we build it.”
Doug Cabral, a REALTOR® and Certified Condominium Specialist (CCS) with Royal LePage Benchmark in Calgary, says Realtors pushed for changes to Alberta’s Condominium Property Act and “now that these regulations are coming into effect, I believe consumers have a lot more protection than they used to when buying new.”
Cabral says a big change is that a buyer’s deposit must now be held in trust by a lawyer. Also, if the condo developer is a member of Alberta’s New Home Warranty Program, it might also offer deposit insurance.
Cabral adds you can always use your own Realtor, preferably one who is a CCS, when
purchasing a presale condo, as they can communicate with the developer and perform due diligence on your behalf.
“I always believe it is better to have full representation of your own when making a real estate purchase,” he said.
Cabral says your Realtor should look at the builder’s track record with previous condo developments, have a condo document review company investigate your builder for any post-possession issues, chat with your lawyer about the deposit, and determine whether your builder offers the additional deposit insurance through the New Home Warranty Program.