Renderings for Anthem's SOCO Two building in Coquitlam, which is part of their Homeownership Accelerator program.Anthem Properties Group Inc.
Vancouver real estate agents and mortgage brokers expect a boost of activity as they head into the fall market in one specific category: family-sized units intended for end users – not investors.
Speculators and investors have lost interest in the current market amid a regulatory environment that restricts short-term rental, foreign property purchases and flipping properties for quick profit. Instead, those now in the market are first-time buyers, upsizers needing space for a growing family, or downsizers entering retirement. That means areas in the Vancouver region that are livable and central, with family-friendly housing, are doing far better than areas that had seen major development of new, small condos intended for rental or luxury condos not geared to local incomes.
“In the last week, I had a listing that had been sitting on the market since March, maybe April, and then we dropped the price a bit and it ended up getting multiple offers,” said realtor Bronwyn Bertles, referring to a condo in the Olympic Village.
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Ms. Bertles is seeing interest in the central Vancouver neighbourhoods of Mount Pleasant and the Fraser Street area, where there’s not enough appealing inventory to suit demand. The demand, she said, is area-specific because it’s end-user driven. She expects the next six to eight weeks to see a boost in sales as more listings come online.
“There’s not any indication of a complete shift in the market, but within Mount Pleasant and Fraser, there’s that micromarket increase,” she said.
Lenders are also seeing a more active segment of the market, despite overall flat prices regionwide. “It’s the places that are livable, for lack of a better word, and not driven by investors,” said Ryan McKinley, senior mortgage development manager at Vancity Credit Union.
“A lot of first-time home buyers seem to be jumping in right now, because interest rates have stabilized. … It’s a somewhat less stressful way [of buying] than it was in 2021."
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Some industry observers expect a recovery in the new year, with interest rate drops on the way.
But long-time realtor Bryan Yan said the west side market is dead, with only 25 out of 464 listings on the market between $2 and $5-million sold in the last month. Part of the reason, aside from the high interest rates, is the withdrawal of foreign capital, he said. He expects the market to stay flat unless there are policy changes or significant rate drops. Mr. Yan knows of owners from China who’ve sold their Vancouver properties.
“They are reversal-of-fortune deals. They are taking their money back to China,” said Mr. Yan.
Anthem's SOCO Two, Coquitlam.Anthem Properties Group Inc.
He believes the government policy that has cut most of the investor capital from the region isn’t the foreign buyer ban or foreign buyer tax, but the federal and provincial taxes on flipping. The province of B.C. added the BC Home Flipping Tax as of Jan. 1 this year, in addition to the federal property flipping tax that was introduced in 2023. The B.C. tax is a far heftier tax that applies to residential property sales, presale contracts or assignments owned for less than two years, including properties bought prior to Jan. 1. If sold within a year, the tax is 20 per cent and after that it gradually decreases, applicable for 730 days. Corporations, partnerships and trusts are included. The federal flipping tax treats equity gains on property sold within a year as business income. Both taxes allow certain exemptions for life events. Mr. Yan said the 25 developers who recently wrote to the federal and provincial governments asking for a lift of the foreign buyer ban should redirect their concerns.
“The one that’s killing your sales is not the foreign buyers’ ban on foreign buyers, that’s not killing you. It’s the flipping tax that’s killing you, because all apartments, 50 per cent, are purchased by investors,” said Mr. Yan, whose numbers are confirmed by Canadian Housing Statistics Program data.
“You go into any strata and 50 per cent are owned by people that don’t live there. So now those guys are sitting on the sidelines, saying, ‘I have to hold this for at least two years. So, what if I need the money, and I need the liquidity?’ That’s the main issue and not just for condos, but especially for condos. Nobody will buy to move in. Most guys with money buy to rent out.”
Another angle of SOCO Two.Anthem Properties Group Inc.
Dennis Kim, vice-president, marketing for Anthem Properties Group Inc., said the market downturn has gone on longer than expected. He has been holding dinner meetings with thirtysomething buyers who’ve bought into their projects, to survey their needs at a time when the all-important end-user is driving the market. The overriding reason for their decision to purchase, he learned, was simply their life situation and timing. The federal government’s break on GST for first-time buyers who purchase new homes less than $1.5-million has also helped.
Anthem is offering its renters the opportunity to put 25 per cent of their rent, beginning from the first day of their lease, as a credit toward the purchase of an Anthem property, up to a maximum of 5 per cent of the new home’s price. The company, which has rentals and new condos throughout Metro Vancouver, is also introducing a rent-to-own program and more flexibility for buyers, such as allowing “subject-to-sale” offers, flexible deposit structures, and move-in dates. Anthem has 129 condos finished and for sale in Coquitlam, including SOCO Two; 192 finished condos in Burnaby, and 108 units for sale in Surrey. The developer also has townhomes for sale in those cities, as well as North Vancouver.
Such flexibility is necessary for these times, he said. The company’s focus is on selling its inventory through incentives.
“We’re trying to be flexible with people’s current situations. So, for example, this one couple who actually just immigrated three years ago and were able to purchase a home, and part of the reason why was the GST incentive. We were able to work with them on a flexible deposit structure, one that really just met where their income levels were at and their cash flow. And so that really, really helped,” said Mr. Kim. “We’re flexible on their move-in date. And that really kind of helped their life situation out.”
“This is a pretty opportune time,” said Mr. Kim.
“The conversations and even the actions are headed in the right direction. I think it needs to continue, that’s for sure. But yeah, it’s certainly more positive than it’s been, let’s say, in the last year.”