Insightful Analysis of Pre-Sale Market Trends: Active Sub-Markets, Development Activity, Upcoming Launches and Releases in Greater Vancouver and Fraser Valley Regions

Source: MLA Canada

Over the past two years, Metro Vancouver’s real estate market has experienced a modern-day version of the classic tortoise and the hare tale. 2022 marked the year of the hare, with a swift and robust start, followed by a loss of momentum and “nap” for the rest of the year. In contrast, 2023 has been characterized by slower but steady and consistent progress. Similar to the fable, the market dynamics emphasize the value of stable and consistent progress over relying solely on short-term bursts of speed. While it’s unlikely that the tortoise (2023) will surpass the hare (2022) in aggregate sales, it will provide greater certainty for market participants and position the market for greater success in 2024.

The recent decision by the Bank of Canada to pause rate hikes has strengthened the sentiment that market activity will remain stable for the rest of the year. Additionally, the central bank’s announcement that inflation is expected to reach 3% by the end of 2023 has led many to believe that interest rates will decrease in the next twelve months. This news is particularly significant in the pre-sale market, where long-term outlooks, market stability, and anticipated future demand play a crucial role in potential buyers’ decisions.

During the first quarter of 2023, 1,661 units were released to the market as a part of 14 presale programs, evenly distributed between the Greater Vancouver and Fraser Valley markets, with 52% (916) in the former and 48% (745) in the latter. However, same-quarter sales absorptions for these programs were only 43% (711), significantly lower than the 74% experienced during the same period last year. Therefore, it is important not to normalize the deviation when comparing the two periods, as market activity at the beginning of last year was driven by buyers wanting to secure historically low-interest rates.

Burnaby was the most active submarket in terms of released inventory, with two prominent presale programs, Perla by Polygon and South Yards by Anthem, standing out with same-quarter sales absorptions higher than the market average, reaching 58%. The early sales momentum of these programs highlights the robust market activity seen in the Burnaby market, which also extended to West Coquitlam, where there was higher-than-expected traffic to sales floors.

Metro Vancouver’s real estate market is facing a critical shortage of supply, which has helped maintain prices and keep purchasing conditions in favor of sellers. Despite a decrease in demand to levels not seen since 2009, the number of actively listed resales at the end of March was the lowest in over 20 years. As lending conditions improve, supply will become the primary hurdle for those looking to enter the market.

Given the current market conditions, developers looking to launch their products in the Fall have a window of opportunity. With low launch activity and stable sales absorptions so far this year, we recommend that developers plan early sales strategies in the next few weeks to prepare for opportunities in the coming months. This is especially true for developers with upcoming products in Burnaby, West Coquitlam, and Surrey.

To access details regarding active sub-markets, development and rezoning application activity, project launches, and anticipated releases for the next quarter, please download the MLA report

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