There’s a new trend in the new condo market. Many wealthy baby boomers are selling their single detached homes, as they have done in the past – but rather than downsizing and banking their profits, these individuals are investing in large, high-end condos. It’s called rightsizing or upsizing.
“Developers are either going towards micro units or larger suites,” says Michael Ward, Grosvenor’s senior vice-president and general manager. “We’re seeing a lot of buyers who are selling their single family homes and purchasing a condo at the same price. It’s a shift in the market that wasn’t prevalent a year ago.”
Evidence of a New Trend
Grosvenor has direct evidence of this at its Ambleside project. Phase one is just over half sold and over 80 per cent of buyers are West Vancouver residents who, up until now, have not had many opportunities to purchase high-end condos locally.
“The finishes and the view are perhaps better than what was in their house,” says Ward. “They might be getting slightly less in square footage, but it’s a lateral move in terms of price.”
Grosvenor takes heed of feedback it receives during the development process and at public meetings. The developer also sits in on focus groups and meets with marketing firms whose job it is to follow trends.
“Developers have to follow the needs of people and anticipate what they’ll want and what will be in demand,” says Ward.
Jason Turcotte, the vice president of development at Cressey Development Group, notes that the obvious areas for these upscale projects are pockets where there is already a lot of wealth, such as West Vancouver, Vancouver’s West Side and White Rock.
“These buyers do not want to leave their neighbourhood,” he adds. “They’ve often been there for many years and they’re looking for options to free up their lifestyle. They want a place with low maintenance that they can lock and leave when they go on holiday.”
Looking for Space and Style
“Beverley has been extremely well received,” says Turcotte, noting that two-thirds of the homes sold quickly. “Buyers are looking for large square footage and quality... they are not willing to compromise. Often their new home is a step up from their existing one, which is already quite nice. Outdoor space is also important to this market. Almost all of the Beverley homes have terraces and roof decks or 30-foot-wide balconies.”
The first project where Cressey began offering larger units was its Arbutus Ridge development. It will be applying the same principals at Sterling in Kerrisdale, which it hopes to bring to market this summer, and Bellevue in West Vancouver’s Dundarave neighbourhood.
Density “No Guarantee of Affordability”
Upscale projects like these are adding density to communities, but they certainly are not making their neighbourhoods more affordable.
“There is no guarantee that density makes for affordability,” says Tsur Somerville, director at the UBC Centre for Urban Economics and Real Estate. “Condos have traditionally appealed to first-time buyers, single people and empty nesters. What’s different now is folks with money who want larger condos. It’s not the old story of empty nesters selling their homes to make money and it will change the type of products developers make.”
“Densification has been a trend for decades,” adds Gordon Price, director of the City Program at SFU. “The bigger change here is the equity some people are able to take out of selling their single family houses. They can afford something more luxurious. Will it continue? I wouldn’t count on it... it will always be a low percentage of the overall population who can afford luxury product.”
Ward adds, “Micro suites combat the affordability issue. They are extremely efficient units and are a place where first-time buyers can enter the market. At the other end of the scale are buyers who are able to afford a larger space but want to be in a multi-family development. Our strategy is at that end of the spectrum. People will pay a premium for upscale, large units.”