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Even so, Hogue questions how much enthusiasm the tax break will ultimately generate.

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“It is being seen as helping to draw down unsold inventory in the condo market, but there is a lot of skepticism,” he said, calling it a “long shot” to revive condo presales.

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The industry is still waiting for legislation and details surrounding the rebate program. Real estate lawyer Lorne Shuman noted Ontario already has some rebates for new homes, but there is still uncertainty about how this latest measure will work in practice.

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“The important thing is for your lawyer to review the agreement and get clarification from the builder as to whether you are getting the rebate on closing,” Shuman said.

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At the moment, no official forms are available, meaning buyers may initially have to pay the tax and later apply for reimbursement.

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Stefano Guglietti, vice-president of sales at Rosehaven Homes, called the HST rebate the biggest tax break he can remember for the home-building industry.

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“It is making a big difference,” Guglietti said, noting builders are already marketing homes by highlighting the before-and-after impact of the tax savings. “It’s helping more with inventory. If you have a couple of units left, it will move the needle.”

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The rebate could also attract institutional investors. Two private equity funds, one targeting $500 million in purchases and another targeting $1.3 billion, have announced plans to buy unsold condos, and other private equity groups are reportedly circling.

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Developers have already converted some planned condo projects into rental apartment buildings, but demand for individual investor-owned rental condos may remain limited in a weakening rental market. Rentals.ca reports rents have now declined year over year for 19 consecutive months.

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“If I have a 500-unit condo building, am I going to sell 500 units to the rental pool?” Guglietti said, questioning the rationality of such a move.

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Sue Wastell, second vice-chair of the Ontario Home Builders’ Association and president of Wastell Homes, said the rebate has already helped move projects that had been sitting unsold for years.

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“Unfortunately, we have people sitting on the sidelines who want to wait until all the documentation is available before they sign a purchase-and-sale agreement,” Wastell said. “Until we know that, we won’t know the full effect. But most of us are going to try and move as much inventory as we can over the next year.”

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She argues that while the rebate may look like a windfall for builders, construction costs have risen dramatically over the last five years, creating a significant price gap between new and resale homes.

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“These HST savings have allowed us to close the gap, and we are back in line with the resale market, so it is apples to apples,” she said.

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Daniel Foch, chief real estate officer at Valery Real Estate Inc., said it is still too early to measure the full effect on resale housing, but demand has softened this year.

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“It’s possible some of the demand is getting pulled to pre-construction, and we have seen builders reduce prices, and it’s a real thing,” Foch said. “Buyers are being rational consumers and saying, ‘I can buy a new house instead of resale. Why wouldn’t I?’”

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That could place even more downward pressure on the resale market.

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At least in the short term, owners of “used” homes may find themselves struggling to compete with shiny new properties carrying generous tax savings. But today’s brand-new condo eventually becomes tomorrow’s resale listing.

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At some point, every home becomes used.

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