A rendering of Anthem Properties Group's Jinju tower in Burquitlam, a stretch of land that sits on the border of two suburbs east of Vancouver, Burnaby and Coquitlam.Anthem Properties Group Inc.
Jennifer Donahue is not a rookie when it comes to Vancouver real estate. In the 1990s and early 2000s, she and her then partner bought, fixed up and flipped several condos in the region, ranging from Richmond to North Vancouver, a period when she sensed that the city was about to take off after Expo 86.
She gave up that lucrative sideline when she started having children and moved to a house in Coquitlam, B.C. In recent years, Ms. Donahue, who works in marketing, wasn’t at all confident about what she saw going on with housing costs and prices, so she stayed away.
But Ms. Donahue recently put down a deposit on a condo in the Jinju tower in Burquitlam, a stretch of land that sits on the border of two suburbs east of Vancouver, Burnaby and Coquitlam. That makes her a unicorn at a time when the local investors who have driven much of the region’s explosive construction boom of the past two decades are entrenched on the sidelines.
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Her decision to jump in the water again happened partly because she has a son she’s hoping will be her first renter, partly because of her confidence that Burquitlam is developing an interesting mix of international residents who she sees as the future, and partly because it was clear that prices were coming down and it’s a good time to buy.
But she also got full-on coaching, support and some extras kicked in by the sales staff at Anthem Properties Group Inc., after that major B.C. development company launched a strategy recently to do whatever it took to convince potential buyers, including some people renting in their existing projects, to take the plunge.
“They offered a step-by-step explanation of the presale process. They invited me to look at the unfinished suite, so I put on a hard hat and boots for that,” she recalled recently. “They didn’t let it go, they didn’t drop it.”
The sales reps also offered to restructure the deposit payments, offering her the opportunity to come in with less than half of the normal first deposit, and let her keep the GST rebate from the federal government. They also threw in a couple thousand as a sweetener even though prices had already been reduced by 5 per cent earlier, bringing her unit close to the $1,000-a-square-foot range that’s considered a good deal by Vancouver standards.
Anthem recently launched a strategy to do whatever it took to convince potential buyers, including some people renting in their existing projects, to take the plunge.Anthem Properties Group Inc.
The Anthem approach was in sharp contrast to another development sales office she went to as she did her research, where the staff just passed her a pamphlet.
Ms. Donahue’s experience is just the latest chapter in what has been a scary roller-coaster ride the past year for those in B.C.’s real estate industry, as they grapple with a market where the cost of construction keeps going up and potential buyers are frozen in limbo.
Those local buyers, who bought thousands of condos in the region since the 1990s, have been scared off by all kinds of factors.
Initially it was high interest rates for mortgages. That has abated, but they are still profoundly hesitant because of the current still-crazy high prices, combined with the fear that those prices will come down and their units will actually be worth less than they agreed to pay for it by the time they have to close, which would mean finding additional money to cover the gap.
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Then there’s the diminishing likelihood that, if they planned to rent out the apartment, they can get enough to cover costs because of the federal governments’ dramatic reduction in immigration and international students, plus the economic uncertainty everywhere in Canada since January, as U.S. President Donald Trump zigzags through contradictory tariff announcements.
Anthem vice-president Dennis Kim said it became clear to the company that it had to do more than the usual at the presentation centre and the solution wasn’t just to lower prices.
Prices are coming down across the board, he said, “but we’re not interested in a race to the bottom.”
Instead, staff have been directed to “hold hands” with potential buyers and work with them in every possible way to figure out solutions to buying. (As it turns out, the offer to convert past rental payments in an Anthem condo to equity in a new one somewhere else is proving harder to carry out. Current renters often want to stay in the same area or aren’t attracted by the new units.)
“We want to create a momentum of positivity,” Mr. Kim said.
More than a year ago, advertisements started to appear from developers offering everything from free beer to $20,000 decorating allowances to promises of help getting a mortgage at a more attractive rate than the local bank.
But that hasn’t been enough to make sales tick up.
“Now, the incentives are starting to get more serious,” said Jon Bennest, a vice-president at Zonda Urban, a Vancouver company that tracks presale condos.
He and others are starting to see serious price reductions, with some projects in Metrotown dipping to below $1,000 a square foot. Polygon has been advertising units in its Onyx project in that area for $100,000 less than the competition.
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But others are trying other strategies, like Anthem with its full-on nurturing of potential buyers and its offer to let people renting some of its condos claim some equity from their time there to move on to buying one of their for-sale units.
At Allure Ventures, which has projects mainly in Surrey, the company is trying to help people regain their confidence with an unusual set of options.
One is that the company buy back a unit at full price in its 333-unit SkyLiving development near the city’s current universities and central core for buyers who change their minds. The company is also promising that, if an investor goes through with a purchase with the intention of renting it out, rent of a certain level will be guaranteed for two years.
Allure Ventures is offering a buyback option for their SkyLiving development for buyers who change their minds.Instagram
For a $750,000 condo with two bedrooms, for example, it will ensure $6,250 a month in rent, the equivalent of 20 per cent of the purchase price in that time.
“It’s our way of saying that we’re building certainty back into the market,” said Mohamed Mansour, the vice-president of sales at Allure. “We didn’t want to just discount prices. This is not a desperation play. But we’re looking at, if somebody does have the money to buy, how do we get those people to have the confidence to buy? Our target audience is somebody who believed in real estate but is uncertain right now.”
Other companies, such as long-time local builders Bosa Properties Inc. and Marcon, have also been offering rent-to-own incentives, says realtor Manraj Dosanjh – anything to start moving the huge glut of condos in the Vancouver area that are already finished or in the pipeline. According to recent statistics, Vancouver has five times as many unsold condos as Toronto (in the 12,500 range, according to the Altus report), even though it’s a far smaller market.
Mr. Dosanjh thinks the deals right now are remarkable – “it’s a great time to be buying because developers are just wanting to off-load their product – but he also notes that even that doesn’t seem to be appealing to a lot of potential purchasers.
“That investor buyer is just not there right now. There are only a very, very few.”