If you’re looking for a new condo in Greater Vancouver, a whole lot of supply is kicking around. Numbers from MLA Canada, a Vancouver-based real estate advisory firm, show a huge number of projects are expected to hit the market this month. The increase of new pre-sale units for sales comes at the same time as a slowdown in sales.
New Pre-Sale Inventory Falls Nearly 26% Across Greater Vancouver
The number of pre-sales units launched fell last month. MLA estimates 688 pre-sale units launched in September, down 33.78% from the month before. This represents a 25.94% decline when compared to the same month last year. A lot more inventory is expected in October, so it’s assumed that many projects held off for an extra month.
Greater Vancouver Pre-Sale Market Enters A Buyer’s Market
You would think fewer units launched would mean a higher rate of absorption, but that wasn’t the case. September only saw 38% of units launched absorbed, down -13.63% from the month before. This represents an annual decline of 52.5% when compared to the same month last year. The rate is the lowest the city has seen in years.
This would be considered a buyer’s market. A buyer’s market is when the ratio falls below 40%, and the city is currently at 38%. Generally speaking, a buyer’s market means a buyer holds a little more power in the negotiation. Buyers can ask for more concessions, like lower prices or upgrades. It doesn’t mean they’ll get them, but the seller won’t laugh if asked about them. Probably won’t laugh… depends where.
Greater Vancouver New Home Pre-Sale Absorption
The ratio of sales to new listings of pre-sale homes across Greater Vancouver.
Note: MLA did not have November 2017 absorption rate available.
Source: MLA Canada, Better Dwelling.
Greater Vancouver To Get A Lot More Pre-Sale Real Estate Inventory
Greater Vancouver is seeing a lot of new pre-sale projects launch in October. MLA anticipates 2,086 new units expected to hit the market, up 203% from the month before. This represents a 13.49% increase when compared to the same month last year. September was a little light, so a few of those launches could have been postponed until October.
Greater Vancouver New Pre-Sale Real Estate Listings
The number of newly available pre-sale units of new homes across Greater Vancouver.
*MLA estimate.
Source: MLA Canada, Better Dwelling.
October’s numbers are expected to the be the most new pre-sales to hit the market since February. It’s a mystery why February was so popular, but we have a hunch it may have to do with Mainland Chinese buyers. Juwai, an overseas real estate firm located in Mainland China, estimates that 21% of Chinese travelers during the February 2018 new year were looking to buy real estate overseas. If you’ve been under a rock the past few years, Mainland Chinese buyers are kind of an important market for the city.
The slate of new condos hitting the market comes at a time when the odds are stacked against quick sales. Chinese capital controls, higher interest rates, a tighter lending criteria, and sky high prices all hit in a short time. Individually, each one of these factors would be a hurdle to developers. All three of these factors? A nightmare. On the upside, there’s inventory if you’re looking for it.
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It’s unfortunate, but people need to accept the reality that the middle class in Canada is on the path to destruction. Chances are very slim you’ll own a home if yo don’t already have one, and most of these condos will be picked up by investors that will sell you it as rent later.
This is the problem with Canada. People with a home think they’re rich, because they haven’t noticed that the value of a million dollars has deterorated into what $100k could buy just a decade ago.
There’s more than enough space to build elsewhere, live there and leave their rental condos empty unless you absolutely must ski and golf in the same day.
Bottom of the market right here. Mainland buyers are back, and February is just around the corner. The risks of keeping their money in yuan are still incredibly strong.
This. Mainland activity is back, according to Juwai themselves.
https://www.vancourier.com/real-estate/exclusive-chinese-buyer-interest-in-metro-vancouver-real-estate-soars-again-1.23473185
You can’t use subjective measures like “inquiries are up” to tell what demand is like. That’s probably a better measure of how a $50 million (SMALL) Chinese company that sells real estate ads is doing.
I’m happy Juwai is growing, but an increase does not tell us whether they’re gaining market share or if they’re even translating into sales. It just tells us that their revenue is improving.
“Inquiries are up” think about what that really means. Inquiries don’t mean sales, they mean inquiries. They’re looking to see how much money they’re losing as their investment properties’ appreciation plummets.
The Chinese Government has been clamping down on currency leaving the country in the last year and they are getting more strict about it + in September the Canadian Government is now sharing with the Chinese Government who is taking money out of China and into Canada.
Chinese market has fallen off a cliff as this has happened, the searches mean nothing if they cannot move money out.
https://www.forbes.com/sites/ralphjennings/2018/02/05/chinas-grip-on-money-outflows-shake-up-malaysia-and-vancouver/#59da5fdb65b1
LOL! Within one month you will eat every word
Why wait till Wet Feb when Chuna just had a golden week ie 1 week national holiday from Oct 1, did we have a spike in sales. Why would Chinese customers want to buy in a falling market?
Prices go up and down. This is the down cycle, after getting one of the biggest windfalls in history. People that are interested in actually investing should be watching these cycles very closely.
People that have no idea what they’re doing and never plan on selling, it doesn’t matter what you do. You think prices always go up, and good for you. You also probably don’t understand depreciation, carrying costs, and inflation however.
Feel free to jump in Jim. I’m sure after 6 months, the biggest bubble in canadian history has already bottomed and is on its way back up…
The incorrect timing of the markets can lead to bankruptcy, why take the risk when the signs point to a capitulation?
I like how some people draw comparisons to Hong Kong especially when Canada does not have an issue with the supply of land. Apples and oranges folks.
ACKTUALLY, all da new immigrants are going to buy them up with all the money they’re bringing into the country. This is going to be a soft landing.
/s
The S&P 500 broke a key trend line yesterday indicating that we are possibly retesting February 2018 lows. The world economies and the stock market usually drops first and real estate has a delayed response. Why? People will do whatever they can to make their mortgage payments, until they simply are not able to anymore. Those who bought real estate in 2017 will default first and it will be a chain reaction as everyone tries to dump their properties on the market. Good luck trying to sell an illiquid asset that will be dropping in value like a rock.