The number of condo presale units released for sale in 2019 fell sharply in Metro Vancouver, as developers respond to demand that fell off.
Developers put 7,588 units up for presale, less than half the 18,998 released in 2018.
The drop was more pronounced for more expensive, concrete condos in high-rise towers than for wood-frame units in smaller, low-rise developments.
It is much harder to presale towers that are 40 to 50 storeys and have some 400 to 500 units than it is for a less-expensive, low-rise or townhome developments of only 80 units. Lenders typically expect developers to lock up presales for 60 to 70 per cent of units before providing money for construction.
Developers warn that if this slower period lasts for several years, it might mean that projects could get cancelled after tying up buyers' deposits for too long. However, with presales taking longer to sell, lengthening the marketing period to, perhaps, 18 months might be a middle ground that allows developers to get to the construction phase.
Developers are also grappling with having paid peak prices for land, adjusting to rising construction costs and navigating increasing bureaucratic hurdles and taxes. They are also warning that there could be a shortage of new housing and a jump in prices in a few years as the population grows and demand returns.
This kind of sounds like a threat to me - let's see how this plays out!
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