Royal LePage’s Randy Ryalls
Randy Ryalls, general manager of Royal LePage Sterling Realty in Port Moody, says one of the major reasons for the supply shortage is that the single-family market segment remains out of reach for most prospective homeowners, and developers haven’t been able to inject the marketplace with enough completed projects.
“In the condo market, it’s been a chronic situation over the years,” he said. “It takes a long time to get those units to market, and there’s lots of demand for them, so the developers can’t seem to keep up with the demand.”
“It’s a matter of years,” he continued. “If the developer buys a piece of land, the process can easily take them years to get approval, get the building up and get people moved into it. It’s a lengthy process.”
Royal LePage House Price Survey shed light on the pressure placed upon condo supply –and, by extension, buyers.
The report also revealed that the ‘move-up’ buying cohort, defined as sellers able to make a pretty penny and move into the single-family segment, are benefiting from Vancouver’s supply constraints. However, many more buyers are priced out of entry-level homes, namely condos, and, therefore, the market altogether.
“We’ve seen an interesting set of events going on where the detached market, because of price point, stalled a little bit because of price appreciation, but there’s still remarkable demand for condos because the price point is still affordable for much more people,” continued Ryalls. “The gap between the two is starting to close a little bit. It’s the first time in years condos are out-performing single-family homes, so the gap between the two is closing.
“If somebody has got a good amount of equity in a condo, for the first time in a long time they can sell that condo and do very well and have enough of a down payment to get into a single-family house.”
Managing Broker of REMAX Westcoast, Richard Laurendeau, pointed to the price index, wherein, by the end of September, condos averaged $635,800 – up from $522,300 a year ago – and townhouses averaged $786,600, up from $686,800 in September 2016.
“By most people’s measurements, that would be considered hefty gains and consistent with what we see in the marketplace with a reduction of inventory and upward pressure on price,” he said.
He added that the supply constraints in the condo market are creating fierce competition among buyers.
“I’ve seen with our realtors who work with buyers that they have experienced multiple examples of competing offers,” said Laurendeau. “In a rising market short of inventory, that’s a symptom that tends to follow along with it.”
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Vancouver’s condo market supply is lagging well behind demand, putting a major premium on units.