Well it already has! On March 17th, MAC sold pre-sold all remaining condos in the Beasley project in Downtown Vancouver (over 100 sales in just a couple of weeks). And the market will see more (albeit only a few) successful pre-sale efforts in 2009. With construction costs down, developers with reasonable land cost and efficient targeted product may be successful.

Affordability will be key, and after years of escalating spec and finishes, we’ll see for the first time in a long time, reduced (less costly) interior specs. Very “smart” design and execution will be paramount to meet the needs of the new High Expectation Consumer. Developers will have to work very hard with architects, municipalities and consultants to keep projects efficient, cost effective and economically viable. Municipalities may need to re-visit recent changes to policy (added constraints), DCC’s, etc. if they want to encourage development in the medium term.

And the market has changed significantly. Gone are the days of low deposits (construction financing will likely require 20% deposits from buyers). Buyer expectations will adapt as the requirement for high deposits will become norm.

The market will see the supply inventories diminish greatly throughout the year. Buyers that purchased pre-sale condos in 2007 and 08 are less likely to attempt to resell into a down market and therefore much of the newly completed supply will end up in the rental pool. It is very possible that we’ll see supply shortages in some market segments and some minor price escalation in some select product types. MAC tracks the gap between supply and demand and we have identified a few key areas and product types that will significantly out perform over the next 24- 26 months. These projects will not really represent a significant amount of supply, but it will continue to press a psychological impact into the market.

We will see more successful pre-sale projects in the Vancouver area in 2009. But unique conditions must first be met: prime location for certain target markets; first time buyers seeking relative affordability; investors seeking lower price points in all categories. Prime location will also be a key, C+ locations will just not cut it this year. The luxury real estate condo products will remain sluggish. The major absorptions will be seen in the affordable product category.

And let’s not forget two other major factors: 1) the 2010 Winter Olympics that will bring increased energy and excitement toward year end. We will see a positive impact in the local economy and reciprocally the real estate market, and 2) the upcoming BC provincial elections will have a huge impact on the health of our economy and the real estate market, (or more accurately the medium to long term effects post election) . A change in the ruling political party could usher in an environment of cautious business investment that could eventually result in a significant negative impact to our economy, thereby reducing the real estate purchasing power of all working people.

Vote and Happy Selling!

Cameron McNeill