Switch to detached houses may be temporary
December 16, 2020
Some Vancouver condo developers are offering price discounts
to boost slumping pre-sales. | Shape Properties
In Canada’s big cities more new homebuyers are opting for detached houses – often outside of the core – rather than condominiums. This switch was predicted earlier in 2020 as the pandemic began.
The result has been lagging pre-sales of new condos this fall in Toronto and Vancouver, which RBC economist Robert Hoque said has become a Canada-wide trend.
In the Greater Toronto Area, data from the Building Industry and Land Development Association (BILD) reveals what is happening.
In October, sales of new single-detached houses posted double-digit increases while the number of new condo sales plunged 32 per cent year-over-year—20 per cent under the 10-year average.
The 1,914 single-family homes that sold in October represented a 44 per cent annual rise and a 42 per cent increase above the 10-year average.
In Metro Vancouver, a survey by MLA Canada shows that in October only 25 per cent of the 1,524 new condos released in new projects sold. This compares to up to 90 per cent during hot condo markets two years ago. A further 490 new condos hit the market in November.
Some Vancouver-area developers are offering buyers incentives to move new product. At the City of Lougheed, a large development on the Burnaby-Coquitlam border by Shape Properties, prices have been cut by $60,000 on some high-end $1 million-plus units, with $50,000 discounts on two-bedroom, 700-square-foot concrete condos that are listed at $746,900.
Mike Stewart, a realtor with Oakwyn Real Estate in Vancouver and a pre-sale condo specialist, said Vancouver-area condo developers currently offering discounts are usually “decorating allowances” that don’t move the needle on the selling price but allow material upgrades and other perks at closing.
Both Stewart and BILD CEO David Wilkes are confident the current condo sales slump will end with the pandemic.
“We are seeing some pandemic-specific impacts that are causing sales to be off a little bit in certain areas, but as we evolve out of the pandemic those factors are also going to dissipate, in particular immigration. Longer term the situation is still very bullish,” Wilkes said.