Real estate in the Lower Mainland has experienced quite the year so far. The pandemic combined with record-low mortgage rates resulted in a spike in sales. Prior to this, many homebuyers had been sitting on the sidelines. Today, however, many are rushing to get into the market. While construction activity is back on track for now, prior to recent events the industry had seen a downturn brought about by external factors like political intervention. Here we take a closer at how real estate markets have bounced back since the slower momentum of 2018 and 2019.
Perhaps the biggest drivers causing the aforementioned stagnation was the implementation of measures aimed at foreign ownership such as provincial speculation and vacancy tax and municipal empty homes tax.
“We had what I call a government-led real estate slump. Our basic fundamentals were strong: Vancouver enjoyed population growth and we had constrained supply and low cost of debt, but what was really happening, in my view, is that we were seeing an impact on consumer confidence. People were afraid to buy and make a mistake in their buying decisions, yet households continued to change and grow and housing needs remained the same. And so investors waited and watched, and so did homeowners, and overall values softened as a result,” said Cameron McNeill, MLA Canada Executive Director, in a video segment.
“Concrete pre-sale was off some 20 percent in value from its high just 24 months earlier, and the townhome values remained reasonably resilient being a lower supply asset class. These values, in general, were just not enough to support development activity, so of course, we saw our development partners hold back their projects leading to further supply shortages.”
Although signs pointed to an uptick at the beginning of 2020, Covid-19 quickly took hold across the globe bringing the marketplace to a halt. However, to the surprise of most, the situation quickly swung the other way as historically low-interest rates were introduced to stimulate the economy, and those fortunate enough to have jobs unaffected by the health crisis stayed at home and increased their savings, allowing them to enter the housing market faster.
Fast forward to today, and things have surpassed all expectations, with a historic amount of sales recorded over the past six months in both the pre-sale and resale categories. This has lead to the emergence of several newly approved projects, and the proof is in the numbers.
Of the 15 pre-sales launched in June 2021 across Greater Vancouver and the Fraser Valley — comprised of 1,307 condominium and townhouse units that included downtown’s 2 Burrard Place, the first of its kind in the area since 2017 — 42 percent sold, marking the fifth consecutive month of a more than 40 percent absorption rate. Other pre-sale launches this year alone included fifteen-fifteen by Bosa in the downtown core, Channel by Pennyfarthing Homes in Queensborough, and Baycrest West by Woodbridge Homes on Burke Mountain, to name a few.
“Canadians, in general, are incredibly resilient — the vast majority have faith that the world is going to be a better place in the future, and there's confidence in our marketplace. Vancouver is blue-chip real estate,” said McNeill.
As the horizon of real estate across the Lower Mainland continues to accelerate, many homeowners are looking for their next place to call home. Stay tuned for more in part two of this topic, featuring a full list of upcoming pre-sale projects to watch out for.
By MLA Contributor Benjamin Yong
