How Can Developers Protect Themselves Against Defaulting Buyers In Today's Market?

BUYING HIGH AND APPRAISING

LOW Recently, developers of residential homes, whether condominium or low-rise "freehold" homes, have faced significantly increased numbers of purchasers not closing their deals because the purchasers are unable to obtain financing, even where significant deposits have been paid to the developer. This is particularly the case for homes sold at high prices at peak market (particularly in late 2021 and early 2022).

We are not seeing as many defaults on high-rise condos due to the longer build period. High-rise condos closing today were likely sold 4-5 years ago when the market was not at a peak; whereas, high-rise condos launched at peak likely will not close until 2025/2026 or later, at which time the market and prices are expected to have rebounded.