Greater Vancouver real estate developers are launching less units – a lot less. MLA Canada numbers show July saw the fewest new pre-sale units launched in years. Developers have been delaying new releases in response to weak absorption. Fewer launches did help to firm up the absorption ratio, but even with the “firming” sales came in very low.
Pre-Sale Launches Falls To Lowest Level In Years
Greater Vancouver pre-sale launches last month were extremely low. Only an estimated 157 new pre-sale units hit the market in July, down 91.82% from last year. This number is even lower than expected, coming in 43.07% lower than forecasted. MLA has previously stated poor absorption is resulting in delayed or cancelled projects. Lower priced projects may also be waiting to cash in on the government’s first-time buyer incentive launching next week.
Greater Vancouver New Pre-Sale Real Estate Listings
The number of newly available pre-sale units of new homes across Greater Vancouver.
Source: MLA Canada, Better Dwelling.
Vancouver Developers Only Sold 58 of The Pre-Sales
There was a sharp drop off in volume for sales of newly launched pre-sales. Only 58 of the pre-sale units launched in July were sold, which is 95.34% lower than last year. Even with the throttling of units, this isn’t a big number for sales. This was the fewest pre-sale launch sales for any month, in at least two years.
Greater Vancouver Pre-Sale Absorption Highest in Months
Much fewer launches helped to improve the sales to new listings ratio (SNLR). The SNLR reached 37% in July, down 43.07% from last year. However, it’s the highest the ratio has been since December 2018. The industry refers to an SNLR above 60% as a seller’s market, where prices typically rise. Between 40% and 60%, the market is considered balanced, and priced right. Below 40% is a buyer’s market, where prices typically drop.
Greater Vancouver New Home Pre-Sale Absorption
The ratio of sales to new listings of pre-sale homes across Greater Vancouver.
*MLA Canada number not available, Better Dwelling estimate based on inference data obtained from MLA.
Source: MLA Canada, Better Dwelling.
The headline detail seems to be that Greater Vancouver’s absorption picked up. That’s true, but the ratio still isn’t even at the balanced level yet. The industry is dropping the number of new project launches due to weak absorption. However, the number buyers for new launches appears to be dropping as well.
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Anyone have prices on these units? I’m hearing there’s some pretty big incentives kicking around these days.
Prices are still high, at least ten times the median salary, but a great deal for a money launderer using a Manager from RBC, TD or BMO as a nominee to park dirty money into Canadian real estate.
Don’t worry the investors from Hong Kong are on there ways. (Oozing sarcasm)
They need to sell and get that money out of HK property first. LOL good luck to them trying to do that while tanks are rolling around their city.
They aren’t even listing their homes for sale. If we’re to believe the narrative being told in Vancouver, people in Hong Kong are running to Vancouver to buy a house immediately, without even trying to liquidate their real estate? 🙄
Even though there’s a “rise,” they somehow aren’t showing up on any government transfer statistics as well. Hmm…
In simpler words people are not interested in million dollar shoe boxes anymore. The market is shifting or has shifted East (Ottawa, Montreal, Halifax). Where you can continue to speculate like mad as the government does nothing about it but only this time you get in early. Wash, rinse, repeat is our economic model.
I bought a 2 bedroom condo for 580k in Vancouver with an added value of $40,000 towards upgrades. Market is finally allowing buyers to enter and buy for cheap
That’s far from cheap.
Cheap is 3 times median income, not 8 times. Especially for condos.
Is that for a 75 year old woodframe in Marpole? You can barely get a one bedroom concrete build for that in Yaletown.
People need to understand, the problem is there are too many predatory real estate ‘investors’. We need to implement a predatory real estate tax where we increase property tax on none primary residential real estate. The point is force these predatory real estate holders to sell their rentier housing. Increasing supply and deflating this bubble. Also corporations without a license and valid reason should not be allowed to own residential real estate to combat money laundering and other predatory real estate practice.
Let’s make these ideas main stream and into public discussion. No one should be allowed to hog supply while local population can’t afford housing. We will turn into Hongkong soon with riots and protest in the streets.
While I agree there are too many ‘real estate investors’, I have to disagree with more taxes and ‘licensing’. The only solution to this mess is to normalize interest rates. The core problem is cheap credit and lax lending standards.
The last thing we need is more government, which is what more taxes and licensing leads to.
Banks don’t lend on a multiple of income !! Why is that even relevant- you realize Interest Rates do matter ??
I think this is a real indication that presales were only for speculation buyers. If only 58 presales are recorded in Greater Vancouver this indicates that those previous long line ups for predsale contract were 95% flippers.
Those presale contracts after flipping paid no taxes…No GST, No Transfer tax, No capital gains tax.. (who would tell IRS)and No interest on the presale amount.
It was a flippers dream, a gravy train. a drunkards dream.
And now it’s over with a large number holding the hot potato.
@Jupiter,
Amen to that 🙂
People of Hong Kong are fighting for their homeland and freedom, standing up to an overwhelming and ruthless enemy. While we can’t seem to get our housing issue sorted. Bring this issue up to your local rep, no more speculating on housing, introduce rent caps per square foot just like in Germany. $2/foot should be the limit with today’s salary. No one is building rental units anyway so we don’t have to worry about scaring “development” away with this law. Lying developers applied to build “rental” units ended up turning them into condos.
How come! Is immigration on halt!
Hey Mill Wing
There is a common misunderstanding that interest rates are set by the central banks to influence real estate. However, this is not true. Central banks move interest rates to influence inflation and deflation firstly. Interest rates do impact real estate investors, but that is not the BOC’s goal. The goal is much broader — inflation, currency valuation, economic growth generally, investment in businesses from farms to whatever — graphic arts. So the BOC cannot drive Canada into a recession by raising interest rates to make housing affordable. This is why other measures must be taken i.e. cracking down on money laundering, putting taxes on speculators and real estate investors, or for that matter, raising the rate at which one can qualify, which the OSFI did. Canada can and should make it harder for non-residents to buy real estate in my opinion, not because of racism — that is a ludicrous rebuttal — but because people need to live somewhere near where they work. Vancouver had finally led the pack on this, twenty years too late, unfortunately.
In 4 years I predict a huge shortage in condos for Vancouver
and by the way who are you ?
I agree with many on this topic, however stopping investors won’t be the solution. Investors can actually help growth of the economy and allow for more rental housing availability (many cities are still below 1% vacancy rate) and with the new Speculation and Empty Homes Taxes, it’s making rental units more available to those who cannot afford to buy at this time.
Our prices won’t likely drop more in any drastic way as growth in this market will be slow to gain traction, however with continued population growth and a thriving economy compared to other parts of the world at this time, absorption rates will balance and thankfully developers have slowed launches so that we can somehow balance. I see resales picking up faster than presales due to better pricing but presales are still a viable alternative for those who want to save up and pay the down payment while continuing to save while their project completes in 3-4 years time. Despite the higher pricing, people will eventually buy more presales as the market slowly picks up. Could be a few more years but we will most likely see more growth so now is not a bad time to consider buying…