Metro Vancouver’s presale condo market recovers in 2020, as long-term investors return
Investors will return to the presale condo market, "but it's a much more longer-view investor. It's not the speculator that we were seeing in 2016 and 2017."

Joanne Lee-Young
Publishing date: Feb 23, 2021

Sales and prices for detached homes, condos and apartments have defied predictions that they would drop due to the pandemic. Fuelled by low interest rates, it’s been called the COVID-19 real estate boom.

What doesn’t show up in the monthly real estate board numbers are sales in the new or presale condo market where buyers purchase contracts for condos from developers who then build them. The market for these sales had just been showing signs of recovering when the pandemic shutdown happened in March 2020.

On Wednesday, Michael Ferreira of Urban Analytics, which tracks presale statistics and trends, will address a virtual luncheon for over 500 members of the Urban Development Institute, which represents the development industry.

Ferreira said that even though new, multi-family or presale condo sales in 2020 were the third-lowest since 2011, “it’s pretty remarkable that we finished with as many sales as we did,” considering the market was “basically paralyzed in the second quarter.”

In particular, he points to an encouraging rally in the last quarter of 2020 when there were 3,800 presale condo sales. To compare, in the last quarter of 2018, there were 4,100 presale condo sales before the number dropped to 2,400 in the last quarter of 2019.

“We’re just 300 less (sales) than what we saw in 2018,” when sales and prices for presale condos were still rising, said Ferreira. “This time around (in 2020), I think it was really just a function of a window or opportunity where interest rates were low.

“Prices had flattened after the (provincial) government-induced (tax) policies in 2018, that really took hold in 2019,” said Ferreira. “There was a bunch of pent-up demand from that that got released. And the results of that happened especially in the second half of (2020).”

Investors had been on the sidelines, he said. They “took their time to gauge what was going to happen as far as what they kept hearing. You know the predictions of prices dropping, the infamous (call by the Canada Mortgage and Housing Corp.) that there would be a nine-to-18 per cent drop in real estate values.”

Ahead, he thinks, “we are going to see the investor (buyer) come back into the market, but it’s a much more longer-view investor. It’s not the speculator that we were seeing in 2016 and 2017,” when there were double-digit percentage price gains each year.

There are a lot of new condos “lining up to be released (for sale) into the market” for the rest of 2021. Because of this, prices won’t be rising, especially for highrise projects where there will be a higher number of units available.

But once travel restrictions are lifted and immigration resumes, that will change, said Ferreira. There will be renewed demand from buyers who have been “planning and wanting to move here and immigrate here. They may have started the process and gotten interrupted” by the pandemic.

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