Developers in BC’s Lower Mainland are expected to launch more condo projects this year than they did in 2018 despite evaporating demand as the market corrects from previous highs, a new report suggests.
In a 2019 forecast, MLA Advisory, the research department of condo-marketing firm MLA Canada, anticipates developers are going to launch 73 projects across the Greater Vancouver this year, up from the approximately 50 that were brought to market in 2018.
The expected launches for this year encompass a total of 13,975 homes, compared to the 11,584 pre-sale units introduced to the market in 2018.
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The numbers only include new concrete developments, which are typically high-rise towers, from Squamish to Abbotsford.
Almost half of all new launches anticipated this year are in the municipalities of Richmond, Coquitlam and Central Surrey. It’s expected to be a quieter for homebuilders in Burnaby, the busiest market for concrete product in recent years.
“As inventory levels rise and projects take longer to sell, we anticipate some of these projects to be delayed due to market conditions,” writes MLA Advisory in the forecast.
Dampening demand is already been apparent when looking at existing condo sales. This past December, sales of existing condo apartments plunged 34 percent to a total of 535 units, according to the Real Estate Board of Greater Vancouver.
Meantime, prices are declining. The benchmark price of a condo apartment was $664,100 last month, down 0.6 percent from November (although that’s still 0.6 percent above December 2017 pricing).
So why are developers launching more and more projects at a time when homebuyers and investors are pulling back?
Speaking to heightened launches late last year, MLA executive director Cameron McNeil told Livabl that home prices were still up considerably from two years ago, which is likely around the time when developers bringing projects to market now purchased their land.
It also takes at least two years for a developer to start selling pre-construction units as they must go through a process that includes municipal approvals, acquiring building permits, and marketing.
“These long timelines commit a developer years ahead of time to move forward with a project and in most cases they can’t afford to just sit and wait and watch, they have to bring it forward and do their best, given the market conditions — within reason,” McNeil explained.