Heading for home
Demand for new residential offerings expected to continue to be robust in the months ahead, writes Michael Bernard
Compared to last fall, when dozens of residential towers were launched in Metro Vancouver’s new-home market, real estate observers expect this fall to be a period of lower inventory, with smaller developments playing a prominent role in the marketplace.
These observers say demand still remains incredibly strong, explaining why prices have continued to rise for condominiums and townhouses this year. They do not anticipate that interest rate increases — there have been two this year — will have a significant impact on that demand in the short term.
MLA Canada, an amalgam of Mac Marketing Systems and BVLD Marketing Group, predicts that the five most active pre-sale markets will be Coquitlam, North Vancouver, Richmond, Vancouver and Burnaby.
“Any townhome product is going to be extremely valuable,” says MLA principal Cameron McNeill.
“The single-family home market is beyond the reach of most now. Townhome product is in short supply. We will see townhomes from Squamish to Chilliwack being in incredible demand and in short supply.
“In the multi-family market, we are going to see more units congregating around transit,” he said.
Scott Brown, president of Fifth Avenue Real Estate Marketing, one of the region’s largest multi-family marketing firms, says he foresees a more sustainable market going forward.
“I think the market is as good and maybe even more stable this year,” he said. While last year’s foreign buyers’ tax temporarily slowed down sales, this past summer has been very strong.
Brown noted that one project in North Vancouver’s developing Seylynn district, the 50-unit Crown and Mountain homes near the Phibbs bus exchange, sold out in a couple of days, even before his firm had a chance to open the presentation centre to the public this fall.
He expects this season will be characterized by this kind of smaller project. That is a departure from last year’s big development releases, such as 23-tower City of Lougheed in Burnaby, Concord Pacific’s 10 towers a few minutes west at Brentwood, and Station Square’s fourth tower at Metrotown.
Elsewhere in North Vancouver, for instance, 164-unit Green on Queensbury has just been launched by Qualex Landmark Northern Limited Partnership as North Vancouver opens up its Moodyville neighbourhood, formerly a collection of postwar single-family homes, to denser development.
Such development will also feature new innovations such as passive heating and the “lock-off suite,” which the city of North Vancouver began promoting a couple of years ago by offering developers density bonuses, says Greg Lowe, of rareEarth Project Marketing. His firm’s client, Evolv, is building a 36-unit townhouse development on Moody Avenue that will feature lock-off suites for three- and four-bedroom homes. The 300- or 500-square-foot self-contained suites, complete with kitchenettes, can be legally rented out monthly or used by family members, depending on the buyer’s needs, he said. The sales centre on lower Lonsdale, now open by appointment, is scheduled to open to the public later this month.
Meanwhile, in neighbouring Burnaby, large developments such as Ledingham McAllister’s multi-tower Southgate City are not expected to be launched until 2018, but other developers have already jumped into the fall market. Townline’s Sussex is a 321-unit, 41-storey tower to be located a short walk to Metrotown’s SkyTrain station and the Metropolis mall. It launched in August and sales have been brisk, with limited inventory of one-, twoand three-bedroom homes still available.
Elsewhere in Burnaby, development continues on Burnaby Mountain at SFU with Intergulf ’s Terraces at The Peak, a 117-unit complex that offers both residential and investment opportunities in the campus neighbourhood.
Michael Ferreira, a partner in Urban Analytics, says lower inventory is a dominant theme in this year’s housing market. “The number of sales in the first half of this year were lower than they were last year, but that wasn’t necessarily a reflection of any drop in demand; more so, it was just a lack of supply.” About 87 per cent of all 6,050 units released in the first half of the year have sold, a high ratio of sales to releases. That release is 44 per cent less than new units released in the first six months of 2016, a drop he attributed to delays in municipal approval times.
Ferreira notes that Burnaby is a market where demand is extremely high, which leads to “pent-up demand” continuing to build as new buyers come into the marketplace. With such conditions, persquare-foot sales prices have risen from $970 a square foot for projects launched in 2016 to new highs of $1,100 a square foot this fall, he said.
In Richmond, Landa Global Developments is poised to launch sales of Cascade City, 273 units in two mixed-use towers sharing a podium and located near the many amenities of Richmond Oval and walking and biking paths on the banks of the Fraser River.
Within Vancouver proper, where suitable land for development is becoming an even more scarce commodity, Create Properties is set to begin sales of its 233 homes at its Second + Main development, while Grosvenor Pacific has begun marketing The Pacific, a 39-storey tower with 214 units at Pacific and Hornby. Meanwhile, Chard Developments will begin selling 58 units in a seven-storey development south of the Olympic Village called Elenore on Fifth.
McNeill notes that some of the best values — in places where land values are still within reason — may be found in the less obvious places, such as Squamish.
Neither McNeill nor Brown sees the recent interest-rate increases as having an appreciable impact on this fall’s sales. However, both do see the stress testing imposed on lenders by federal authorities — whereby borrowers must be able to show they can shoulder higher payments should rates increase — could have an effect in the new year.
Meantime, Jason Turcotte of Cressey Developments has a word of warning for buyers this season: make sure the developer you purchase from has a track record for seeing their projects completed.
“It’s no different from buying a car. You wouldn’t buy a car from a car company you’ve never heard of. Know you are buying from someone who has the means to see these projects through.”