Much of the talk about the real estate market in Metro Vancouver this year has been highly-dependent on interest rates, and that extends not just to the resale market, but also the presale market.
According to a report published by Fifth Avenue Real Estate Marketing Limited and Baker West Real Estate, with data collected by Zonda Urban, there is a fairly clear distinction between projects that are nearing completion and those that are further away from completion — and it's all tied to the cost of borrowing.
"With the higher cost of borrowing for consumers today, it is worth noting that developments with the longest completion dates are achieving the highest sales activity," Jamie Squires, President and Managing Broker of Fifth Avenue, says in the report. "On the other hand, developments with standing inventory or inventory completing in under a year are struggling compared to those on the market completing in 2025 or later."
Higher interest rates means higher hard costs for developers — on top of the bevy of soft costs such as development charges and community amenity contributions — and this has resulted in our current market, where its "near impossible for any real price movement in either direction."
Thus, both developers and purchasers continue to assess the market, with many on both sides deciding to take a pause as they wait for the numbers to change — and allow them to comfortably move forward.
According to the report, a total of 2,095 units across 23 new projects were introduced in Q3 2023, and 2,682 sales were recorded. This came after a total of 3,654 units across 37 new projects were introduced in Q2.
As of the end of Q3, there remains a total of 8,064 units released that have gone unsold, which represents a 0.5% increase from Q2, although it also represents a 4% decrease from Q3 2022. Furthermore, there remains a total of 1,154 completed multi-family homes that remain unsold — 144 more than Q2.
Of the 2,682 sales that were recorded, townhouses accounted for 390 of the units (14.5%), units in low-rise buildings accounted for 833 units (31.1%), while units in high-rise buildings accounted for 1,459 of the units (54.4%).
On high-rise unit sales, Fifth Avenue says that 76% of the activity occurred in Burnaby, New Westminster, Surrey, and the Tri-Cities. Notable projects include Citizen by Anthem Properties in Burnaby, Perla by Polygon Homes in Burnaby, and Gardena by Intracorp in Coquitlam.
On the low-rise unit front, projects that saw notable sales activity included Village At Sunshine Hills by JPS Developments in North Delta, Unity by Whitetail Homes in Langley, and City & Laurel by Atterra Development Group in Maple Ridge.
For townhouses, notable projects include Riley Park by Mosaic Homes in Coquitlam, West Wind at Lelem by the Musqueam Capital Corporation at UBC, and the Rail District by Yorkson Infinity Properties in Central Abbotsford.
Looking ahead, Fifth Avenue says they expect a bit more of the same.
"As we look forward to the final quarter and the concluding chapter of 2023, we do expect further moderate decline in new home sales activity. However, we do not see prices adjusting up or down in any significant manner given the pressure of cost increases on construction and the end consumers' cost to borrow."
Market activity typically dips in the winter regardless, but could be a bit more noticeable this year if developers close early for the holiday season with stronger hopes for 2024. Again, much of it could be dictated by what the Bank of Canada does with its next rate announcement, coming December 6.
"From holding our breath over each interest rate announcement to date," Squire says, "to taking aim at owners of short-term rental accommodations without a consideration of markets outside the primary metropolitan area, to 'naughty lists,' and new announcements with respect to local housing targets for each city, we are all weathering now blustery market conditions and winds of change."
Read The Fifth Dimension Fall Edition 2023 report in full here.
This article was produced in partnership with STOREYS Custom Studio.