APRIL 2024 PRESALE REPORT: THE MARKET FINDS MOMENTUM
“March saw more developers jump into the market and release new projects to take advantage of increased Spring demand. As such, same-month unit absorptions decreased from February even with sales increasing on an absolute basis. In April, we are already seeing a significant increase in realtor/prospect engagement events at presentation centres to capitalize on a generally more active Spring market.” - Garde MacDonald, Director of Advisory PRESALE LAUNCHES IN MARCH EXPERIENCE A YEAR-OVER-YEAR INCREASE March saw a significant increase in presale launches compared to the previous year. In 2024, the early months showed robust activity, in contrast to the slow start experienced in 2023, which only picked up momentum in the summer. This year, March followed historical patterns more closely, with a steady stream of presale projects entering the market. A total of 11 projects were launched, introducing 1,552 units, a remarkable threefold increase from March 2023. Sales in March 2024 reached 416 units, achieving a 27% absorption rate. Noteworthy launches in March included Wesgroup’s second tower at Reign in Metrotown, which attracted considerable interest, selling about 80 homes within 45 days, equating to 22% of its total inventory. Another standout was Ledgeview in Surrey City Centre, which sold 200 units, approximately 63% of its available units. This project's appeal was bolstered by its competitive price per square foot at $850 and a modest 5% deposit requirement, making it a highlight of the month's presale activity. WHOSE POLICY IS IT ANYWAYS? ANALYZING THE EFFECTS OF POPULATION GROWTH ON RENTAL PRICES Canada's recent immigration policy shift, setting a flat target for 2026 and reducing temporary resident intake, aims to tackle the correlation between population growth and housing and infrastructure pressures. Traditionally, immigration has driven demand and economic vitality in Canada, contributing to more consistent growth. However, the nation now grapples with a housing crunch, evident in inflated prices and limited availability, particularly in areas like Metro Vancouver where rental rates surged to 9.5% in 2023. To alleviate housing strains, the government has taken steps such as capping international student numbers and tightening work permit criteria. These actions reflect a broader attempt to balance population growth with housing availability. Yet, adjusting immigration levels alone won't solve rental affordability issues without stimulating new construction. A comprehensive policy approach spanning housing, infrastructure, and healthcare is crucial. WILL APRIL SURPASS EXPECTATIONS? April is poised to continue the momentum from March. According to MLA Advisory, there are forecasts for ten project launches, offering a total of 1,996 homes. This would mark the second-highest number of home releases in a month since July 2022. The Fraser Valley leads this surge with seven projects in the lineup. Notable launches include Parkway (Building 2) by Bosa Properties and Amson Bloc by Amson Group in Surrey. Parkway initiated sales from late March to early April and aims for a gross blended price per square foot in the mid- to high-$1,100s range. Amson Bloc, comprising two buildings on the border of Panorama and Sullivan Heights, began previews in early April. It boasts custom interior millwork, zebra blinds, and over 3,600 square feet of indoor amenities.
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MARCH 2024 PRESALE REPORT: A WAVE OF ANTICIPATED PRESALE LAUNCHES
“In line with the resale market, the volume of new presale supply increased month-over-month, matching typical seasonality. On our active sites, foot traffic and deal activity are generally increasing, giving us confidence going into the Spring. We anticipate new project launches to double from February to March and give us an indication of market breadth for the remainder of 2024.” - Garde MacDonald, Director of Advisory In February, there was a surpassing of expectations as strong absorptions within the same month were observed. In February, six presale programs were initiated, introducing a total of 590 residences to the market and achieving a 42.2% absorption rate within the same month. Particularly noteworthy was the launch of Juno, marking the debut of Surrey's first concrete tower of the year. Following weeks of early previews, Juno entered the market with 50% of its inventory already sold, demonstrating robust initial sales. Similarly, the Partington Creek development on Burke Mountain commenced sales between late January and early February. Its initial release introduced 24 residences to the market, many of which are listed on the MLS. To stimulate sales with compelling messaging, the initial pricing strategy for these residences averaged $700 per square foot. Despite their spaciousness at approximately 2,000 square feet, this pricing strategy positions the project competitively within the market, offering compelling value compared to other available options for prospective homebuyers. In 2023, the Okanagan real estate market underwent a period of adjustment characterized by dynamic shifts influenced by broader economic factors. Over the course of the year, 13 new projects initiated presales, introducing 1,319 units to the market. Of these, 43% were absorbed, resulting in 565 sales, indicating a positive market response. The majority of these projects were concentrated in the Central Okanagan, particularly in downtown cores and surrounding areas. Wood frame constructions were prevalent among these launches, catering to buyers seeking entry-level pricing or investment opportunities. However, investor sentiment experienced a slight shift following the Provincial Government's announcement of new short-term rental legislation in October. Resale activity in the Central Okanagan, notably Kelowna, saw a decline, with total resales decreasing by 27% compared to 2022 and by 50% compared to 2021. This decline was influenced by rising interest rates and changes in work-from-home policies. Despite these challenges and the impact of significant wildfires, the market demonstrated resilience, supported by the region's high quality of life and growing population. The impending short-term rental restrictions, effective May 2024, aim to address housing supply and affordability issues but present challenges for the tourism industry and the broader community. As the market prepares for potential shifts in interest rates and policy impacts in 2024, the Okanagan real estate sector finds itself at a critical juncture, navigating both opportunities and obstacles to sustain its attractiveness and vitality. MARCH MADNESS BRINGS WAVE OF NEW LAUNCHES The Spring season typically heralds the peak activity in the real estate sector, and it appears that 2024 will follow suit. It is anticipated that 14 presale programs will debut in March, introducing a potential 2,150 units to the market. Unsurprisingly, a majority of these residences will be concrete condominiums, with significant launches including Reign by Wesgroup's north tower, Ethos by Anthem, and Bosa's Parkway 2 in Surrey. Amidst fierce competition within the market, developers are seeking ways to distinguish themselves by crafting unique narratives and innovative launch promotions. A noteworthy example is Reign's "Ticket to the Top" campaign, a clever homage to Willy Wonka's golden ticket. Prospective buyers purchasing on lower floors have the chance to win an upgrade to the penthouse of their chosen bedroom type. Such incentives generate excitement and leave a lasting impression. Overall, developer sentiment remains cautious. The current market environment is rife with uncertainties and lacks sufficient guarantees. Attention is primarily focused on the latter half of the year, when anticipated declines in interest rates are expected to reinvigorate sales activity, driven by pent-up demand.
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JANUARY 2024 PRESALE REPORT: EARLY SIGNS OF LUNAR NEW YEAR MOMENTUM
For individuals engaged in dynamic ventures, December might have seemed like a time when the real estate market took a hiatus, trading "For Sale" signs for festive wreaths and seasonal ornaments. Nevertheless, amid this seasonal lull, notable project unveilings persisted, showcasing robust market engagement. An exemplary instance is Mosaic's Town & Centre, which commenced sales activity in early December. This development promptly garnered attention, securing over half of its inventory (approximately 130 units). Its success can be partly attributed to its distinct positioning within the market landscape, representing the first opportunity to invest in the Coquitlam Centre area in six years, thus generating considerable anticipation. Likewise, the introduction of South Yards (Tower B) by Anthem made a subdued yet significant impact on the market. Despite its understated launch, it achieved a commendable 70% sales rate of its available inventory. The triumph of these initiatives underscores their strategic introduction in markets with minimal direct competition, enabling them to distinguish themselves and effectively attract prospective buyers. This emerging pattern suggests that even during typically sluggish periods in real estate, meticulously positioned and eagerly awaited projects can attain notable sales figures, challenging the conventional notion of the holiday season as a dormant phase in the property market. REAL ESTATE IN 2024: FORECASTING MARKET TRENDS FOR THE UPCOMING YEAR As we step into 2024, the real estate market stands at a critical juncture, presenting both obstacles and prospects. The year ahead is anticipated to be a litmus test for developers and prospective homebuyers alike, yet there is a sense of optimism regarding the long-range trajectory, indicating potential growth in the residential sector. Interest rates will continue to be a focal point of discussion, with numerous economists predicting multiple cuts, ranging from 3 to 4, throughout the year. However, the reliability of these prognostications is somewhat uncertain. While a decrease in rates is foreseeable, the extent and timing of such adjustments remain ambiguous. Although rate reductions might influence market sentiment, their tangible impact on affordability is subject to debate, given the persistent disparity between buyer willingness and seller expectations. Some degree of price exploration is anticipated, particularly in areas with infrequent property transactions or limited new launches in recent months. Despite the obstacles confronting the market, there exists a prevailing understanding among potential buyers that factors such as robust immigration and escalating construction expenses are poised to sustain upward pressure on property values in the medium to long term. Consequently, it is expected that presale activity will maintain its vigor throughout the upcoming year. PRESALE MARKET SEES MODERATE START TO THE YEAR Three presale initiatives are projected for January, introducing a total of 785 units to the market. Among these launches are Soenhaus by Marcon and Piano by Concord Pacific, with the latter being a highly anticipated concrete tower scheduled to debut in Downtown Surrey towards the end of January. While market uncertainty may linger until there is greater clarity regarding the trajectory of interest rates, there is a noticeable uptick in marketing efforts leading up to the Lunar New Year. Anticipate further updates on Grosvenor’s Brentwood Block, Streetside’s Juno, and Qualex-Landmark’s Ironwood. SOURCE: MLA CANADA
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