Vancouver homebuilders to delay new condo launches during normally-busy spring season as housing slump intensifies
MLA sees a slowdown in townhouse construction
Josh Sherman
other
Spring — a time of warmer weather, blooming flowers and a fresh crop of condo launches for homebuyers to choose from.
Normally, at least. But a real estate marketing and analysis firm predicts some homebuilders are going to hold off on launching new developments during the normally busy spring real estate market.
“We expect to see a number of developers delay their planned spring launches for more favourable conditions,” says Suzana Conclaves, chief advisory officer and partner at MLA Canada, whose February 2019 Pre-Sale Real Estate Insights report includes the prediction.
By the end of March, MLA anticipates developers will have brought about 620 new pre-sale units to market in wood-frame, concrete and townhome developments across five developments in Greater Vancouver and the Fraser Valley, down sharply from 1,144 in February, when eight projects began selling.
Of the February tally, 15 percent have sold so far, and inventory is piling up. To date, approximately 14,000 pre-sale homes have been launched this year, and more than 5,800 of them are still available. Commentary from MLA suggests this isn’t a bellwether of a price crash, although developers are offering incentives to homebuyers in an effort to move more units.
“Despite this currently available inventory, market fundamentals with regards to population and job growth are indicating that upward pricing pressure on our housing market will continue in the long run,” the MLA report reads. “Buyers have simply adopted a wait and see attitude at this point in time.”
The majority of units in the pipeline this month are expected to be within concrete buildings, which are typically high-rise towers but can also be five- to six-storeys tall. MLA predicts a total of 545 units of this type will be released this month for pre-sale, meaning homebuyers can enter into an agreement to purchase them upon completion.
In wood-frame buildings, which are generally four- to six storeys in height, 40 units are on the way, while 35 townhomes will be available as well.
“With historical high land costs, construction costs which have not adjusted yet and a myriad of city fees, taxes and policy changes, many projects are currently not viable and we will continue to see housing starts decline,” Conclaves adds.
Declining housing starts, which are measured by when developers begin construction work on a project, are part of a broad national trend recently highlighted in a BMO note to clients.
“Residential construction, which remained firm through much of last year, has shown signs of slowing with the double whammy of tougher mortgage rules and poor affordability in major markets,” wrote BMO Chief Economist Douglas Porter in the note.
Of course, rough winter weather in major markets hasn’t helped either, and with spring right around the corner, Vancouver is still getting snowfall warnings.
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