Metro Vancouver and Fraser Valley’s pre-sale residential market saw some renewed momentum in June, following the severe uncertainty at the peak of COVID-19 earlier in the spring.
MLA Canada’s latest pre-sale market report for the Lower Mainland indicates there were seven project launches offering about 259 pre-sale units for the month, including 118 woodframe condominium units and 141 townhouse units.
But this is considerably under the June forecast of eight project launches with nearly 600 homes.
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In comparison, there were five projects with 283 units in April at the peak of the pandemic — down from eight projects with 723 units in March.
For May, there were seven project launches with 240 units, a considerably better result than the month’s forecast of four project launches with 180 units.
MLA Canada’s forecast for July calls for eight project launches with 659 homes, including 208 woodframe condominium units and 451 townhouse units.
With consumer spending rebounding and overall confidence building up, with the public becoming more used to physical distancing and other health safety practices, face-to-face business in real estate has resumed, and most presentation centres have reopened and are now operating at near-regular hours.
The projects that found the most success in May and June were townhouse projects, but most of the sales occurred with projects that are complete or nearing completion. The absorption rate for June was 14.3% — up from May’s rate of 10%, but down from April’s rate of 17%.
“Over the past three months, the most active market participants have consumers with a genuine need for housing who are typically purchasing at entry level price bands,” reads the bulletin.
“Visitor traffic is on the rise across new home sale presentation centres even with physical distancing measures in place. Projects geared towards end users and lower level pricing segments continue to perform best with townhomes still paving the way.”
Analysts say most major developments will be put on hold until the market’s health has returned enough to hit a project’s required financial benchmarks within the necessary timelines. These high-rise projects could enter the market before the end of 2020, but this also depends on the fallout from the potential second wave of the pandemic in the fall.
“These waves will undoubtedly derail new product hitting the market further limiting supply into next year and beyond considering the long lead times to completion,” continues the bulletin.
“Despite signs of recovery in the real estate market, the impacts of Covid-19 are still very prevalent. Unlike the past, there is not a significant wave of investor purchasers that are willing to make an immediate buying decision. Accordingly, many projects have either extended or pushed back VIP previews and are not committing to grand openings until the Fall.”