The economic uncertainty from the U.S.-Canada trade war has scuttled any hopes of a modest recovery in Metro Vancouver’s presale condo market. Read More
There was hope lower interest rates would lead to a recovery but any gains were short-lived, with the uncertainty of the tariff situation now hurting sales
There was hope lower interest rates would lead to a recovery but any gains were short-lived, with the uncertainty of the tariff situation now hurting sales
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The economic uncertainty from the U.S.-Canada trade war has scuttled any hopes of a modest recovery in Metro Vancouver’s presale condo market.
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While smaller projects — those with 100 units or fewer — are more likely to qualify for financing and go ahead, larger projects will face a more difficult time.
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Many units in larger projects have already been on the presale market for six months, which is half the time that lenders generally allow for marketing a presale development project. New regulations introduced in February allow a developer to apply to extend this window from 12 to 18 months, but it will still be tough to sell enough units to qualify for financing when buyers are worried about the economic outlook and job security.
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“I think projects just won’t start and people will get their deposits back,” said Evan Allegretto, president at Intracorp Homes. “And maybe one of four projects will be successful because people that are wanting to buy will accumulate to the project that is most likely to start.”
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Westcoast Homes
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Allegretto said that when the market was slow in the past, developers would be patient and try to find other ways of creating value to attract buyers. But now, the act of waiting also means having to adjust for changing building code requirements and fee increases.
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A few developers might put in their own money or seek other investors to reduce the amount of financing needed, but that takes deep pockets and a high tolerance for risk.
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There were signs late last year that as the real estate market for existing properties was starting to pick up in response to interest rate cuts, which would lead to a recovery for the presale market. There is usually a four- to six-month lag between sales increasing in the resale market and that is happening in the presale one, according to Barrett Sprowson, senior vice-president of sales and marketing at the Peterson Group.
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For example, Peterson’s 229-unit project on Kingsway in east Vancouver, called Frame, launched sales for presale condos in mid-2022. For months, there had only been one or two sales. But then, they started to see five or six or more a month.
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The gains, however, were short-lived.
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By February and March, the uncertainty of the tariff situation hurt sales across the presale market, pushing them to about 20 to 25 per cent lower than for the same months in the past two years, said Sprowson.
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On Wednesday, Greater Vancouver realtors said March home sales in Metro Vancouver for existing properties were the lowest going back to 2019 for the same month.
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Many would-be buyers are sitting on the sidelines to wait for more clarity on where the market will land after the federal election and the trade war, said Allegretto.
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One project that is likely to proceed is a 131-unit condo project in Ladner that Headwater Projects launched last May. It only has to sell a few more units in order to hit the target it needs to qualify for financing, said vice-president McGregor Wark.