Executives in Vancouver’s real estate sector are cautioning about an oversupply of newly constructed condos that remain unsold and vacant across the region. According to the Canada Mortgage and Housing Corporation (CMHC), approximately 2,500 new condos are currently unsold in Metro Vancouver, a figure that has doubled from the previous year. Anne McMullin, the president and CEO of the Urban Development Institute, attributes this surplus to the fact that building condos has become prohibitively expensive for the majority of local residents.
McMullin highlighted that the escalating costs over the past decade have pushed the price of constructing a unit beyond the reach of 80% of the population in the Metro Vancouver area. Developers, she noted, are reluctant to sell at a loss, emphasizing that they cannot afford to operate at a financial deficit. She also pointed out that recent government policies have contributed to the increased cost of construction, making it challenging to build units that align with people’s affordability levels.
Some developers are now refunding deposits to buyers as they struggle to meet pre-sale targets necessary for securing bank financing for new projects. McMullin expressed concerns about potential layoffs in some companies and emphasized the need for cities in the region to reassess their policies and requirements regarding housing, energy efficiency, and public amenities.
Rennie Greg Zayadi, the President of a Vancouver-based development firm, acknowledged the market slowdown since March 2022, stating that the decline in new condo sales will have significant repercussions in the labor market. He underlined the importance of understanding buyers’ preferences for larger living spaces within a specific price range. Zayadi emphasized the concentration of unsold condos in Burnaby, Coquitlam, and parts of Surrey, urging the industry to deliver inventory at more affordable price points to meet market demands.
Real estate agent Oleg Galyuk noted that older condos tend to sell better than newly constructed ones, attributing this trend to layout designs and parking space availability. Developers are offering various incentives, including parking stalls and cash-back deals, to entice buyers into purchasing completed units. Galyuk criticized the current focus on investor-driven projects, suggesting that there is an oversupply of condos that do not cater to the preferences of potential residents.