Mattamy Homes Canada offering refund to homebuyers if home value drops before closing

A significant slowdown in the Canadian housing market, particularly in the Greater Toronto Area, has prompted a novel response from at least one major developer. Mattamy Homes is temporarily offering a form of price protection to prospective homebuyers, a move analysts suggest is designed to bolster confidence in a challenging market.

Developer Offers Refund on Preconstruction Homes

Until March 8th, Mattamy Homes is providing a refund to buyers of eligible condos and low-rise homes in Ontario and Alberta if the base price of their unit decreases before the closing date. This “Price Protection Program” – detailed here – reimburses the difference between the original purchase price and the lower price 30 days before occupancy.

How the Program Works

The price comparison is based on the base model of the home within the same community, excluding any upgrades or lot premiums. According to Sepideh Morshedizadeh, vice president of marketing at Mattamy Homes Canada, if a buyer initially paid $800,000 for a home and the base price drops before closing, they would receive a direct refund of the difference. The calculation occurs 30 days before the scheduled occupancy date.

A Response to Market Conditions

The move comes as new home construction is predicted to decline over the next two years, particularly in Toronto, due to a surplus of condo inventory. Industry observers note that the preconstruction market in the Greater Toronto Area is currently facing significant headwinds, with potential buyers expressing considerable nervousness. Some experts, like Toronto realtor Daniel Zadegan, believe Mattamy’s program is a positive incentive to encourage purchases in an uncertain environment.

However, not all industry professionals view the program as a comprehensive solution. Ralph Fox, broker of record and co-founder of Fox Marin Associates, suggests it’s largely a marketing tactic, as the protection is tied to the price of an identical model within the same phase, rather than broader market fluctuations.

Focus on the End User

Mattamy Homes emphasizes that the program is geared towards individuals seeking long-term homeownership, rather than investors looking to profit from market speculation. Morshedizadeh stated that for a homeowner, short-term market fluctuations are less relevant than the goal of securing a place to live.

Frequently Asked Questions

What areas are included in Mattamy’s Price Protection Program?

The program applies to eligible condos and low-rise homes in Ontario and Alberta, specifically across most of Mattamy’s communities in the Greater Toronto Area, including Brampton, Mississauga, Oakville, Markham, and a condo building in Toronto’s High Park neighbourhood.

When does the price comparison take place?

The price comparison is calculated 30 days before the scheduled closing or occupancy date of the home.

What is excluded from the price comparison?

Upgrades and lot premiums are not included in the price comparison; the program focuses solely on the base model of the home within the same community.

Whether Mattamy’s program will become a permanent feature remains to be seen, though the company reports “really strong interest” from buyers. Other developers may consider similar initiatives if the current market conditions persist, or the program could be expanded based on its initial success. Alternatively, if the market stabilizes, Mattamy may discontinue the program.

Given the current challenges in the preconstruction housing market, do you think price protection programmes will become a standard offering for developers?