The trend of Lower Mainland developers delaying condo launches is going to continue for the rest of the year, suggests MLA Advisory.
The research branch of real estate marketing firm MLA Canada says to date 17 projects, encompassing more than 6,000 units, have already been put on hold in the region in 2019.
Housing Market News Alerts
Sign up now for news alerts on the Vancouver housing market
“Looking ahead, as current inventory levels rise and projects take longer to sell, we anticipate many of these projects will hold their sales launch to 2020 and wait for more favourable conditions,” reads MLA’s Mid-Year 2019 Real Estate Insights report.
“This will cause a backlog of approved projects that we have not yet seen in the Lower Mainland,” the report continues.
Between July and the year’s end, MLA predicts 27 more condo projects will enter the pre-sale phase, bringing more than 3,500 pre-sale units to the Greater Vancouver and Fraser Valley market.
A big chunk of these are anticipated for Richmond, where five project launches containing upwards of 700 units in total — the largest share of any submarket in the Lower Mainland — are forecast to enter pre-sale status.
Of the 4,103 pre-sale homes brought to market in the first six months of the year, a little over a third have sold, and future sales will depend heavily on developers’ reputations, as well as location and value, says MLA.
“Though demand, in theory, is exceeding the supply we are bringing to market, buyers are reluctant
to commit to purchasing decisions until they believe the market has reached the bottom,” MLA says in the report.
The backlog of units accumulating as a result of delays and reluctant homebuyers could result in surging prices if and when the Lower Mainland’s market picks up again, suggests Suzana Goncalves, executive vice president of sales and marketing and a partner at MLA Canada.
“With the decline of housing starts and the increase in population we could be setting ourselves up for another rapid price increase once the market officially turns,” she says in a statement.
“Waiting for bottom could prove foolhardy for some buyers,” she warns.