The latest edition of the Greater Vancouver Condominium Market Opportunities Report highlights the strong likelihood of an oversupply of new high-rise and low-rise condos as developers plan to boost production over the next six months. And now, February's MLS® sales numbers indicate that the resale market in 2012 will be much weaker than last year. The changing market will result in slower sales of new condos by the second half of the year, if not sooner. Increasing production and decreasing demand will mean a big wakeup call for those developers who think that 2012 will be 2005 all over again.
February MLS® sales numbers for every major high-rise market in Greater Vancouver were substantially less than sales in February 2011 and February sales were below January sales in many markets. Sales in all low-rise markets except for Coquitlam-Port Moody-PoCo were also down from February 2011.
MLS® sales usually experience a seasonal uptick in the months of February, March and April. Perhaps sales will increase over the next few months but right now there's no reason to indicate that they should. Increasing prices won't stimulate demand. BC will still be losing people to Alberta and other provinces over the next six months. And developers are unlikely to cut back on planned starts until faced with the prospect of discounting prices to move standing inventory.
High-rise Market
Approximately 370 high-rise units were sold through MLS® in February 2012. This is slightly less than the number sold in January but about 20% below sales in February 2011. Slow sales in February don't necessarily mean a weak first quarter sales. February sales in 2010 were also down from the previous month and down from February 2009 and then picked up in March and April. But overall, sales in 2010 were down by 40% from the previous year.
The average MLS® selling price for high-rise condos increased sharply in February thanks to a spate of $1million plus sales in the Downtown market. The overall average selling price in February was $576,000 or $601 per square foot. This is up by 12% from February 2011. However, judging from sales over the past three months, the high-end, luxury market is starting to feel the effects of a slow down in demand. Sellers of million dollar plus high-rise units have had to come down by an average 5% from their list price to close the deal.
MLS® Condo high-rise market Feb 2011 from Strategics
Low-rise Market
MLS® sales of low-rise condos in February were up from January but the 417 sales were 13% below sales for the same month in 2011. The Coquitlam-Port Moody-PoCo market was the only major low-rise market to post significant year-over-year gains in February.MLS® low-rise sales in this market were up by 33% compared to February 2011.
The average MLS® selling price for low-rise condos in February was $327,000 or $369 per square foot. This is also up from 12 months ago but by a much more modest 1%. Units in the 700 to 1,000 square foot range made up most of the MLS® low-rise sales over the past three months. Units in this size range sold in a fairly narrow price range from $290,000 to $330,000.
MLS® condo market analytics low rises Feb 2012
Townhouse Market
Approximately 365 townhouse condos sold through MLS® in February. This too, was down from the previous month and from February 2011 but not by as much as the drop in high-rise and low-rise sales. Compared to 12 months ago, February 2012 MLS® townhouse sales were off by only 4%.
The average MLS® selling price for townhomes in February was $494,000 or $310 over square foot. This is up by 1% from 12 months ago but up by 11% from the average selling price in January. At the end of February, Greater Vancouver had over 5,700 active townhouse listings.This represents about 82 weeks of sales. Any further price increases won't do much to improve sales in this market.
In-depth regional analysis here. Condo/Townhouse Price Calculator here.
