The condo market in Metro Vancouver is experiencing a significant downturn, with a notable drop in presales leading to fewer new projects. From January to July, only 35 new projects were launched in Metro Vancouver and the Fraser Valley, which is 40 percent below the five-year average, according to data from a real estate sales and marketing firm.

Barrett Sprowson, senior vice president of residential at Peterson Real Estate, described the current market as "definitely a very stagnant market." During the same period, fewer than 400 units were sold, marking an 85 percent decrease compared to historical sales figures. In July alone, 572 units were introduced to the market, reflecting a 33 percent decline from the average for that month over the past five years.

Currently, there are over 4,000 new condo units, either completed or nearing completion, that remain unsold in the Metro Vancouver area. This situation has prompted a group of British Columbia developers to urge both federal and provincial governments to ease restrictions on foreign buyers to stimulate activity in the presale market. However, the B.C. government has quickly dismissed this request.

Academics have pointed to research indicating that measures targeting foreign buyers have contributed to cooling a market that previously saw rapid demand and steep price increases for presale units. This has made it difficult for local buyers, particularly those with average incomes, to enter the market.

The decline in new projects is accompanied by a reduction in the scale of developments. In July, eight new presale projects were launched in the Lower Mainland, but these projects featured significantly fewer units than in previous years. Six of the eight new projects are located in the Fraser Valley and consist of smaller, wood-frame buildings.

Factors such as decreased foreign investment, rising interest rates, and declining rental income have contributed to the slump in presales. This downturn has coincided with several court-ordered sales and projects entering receivership. Notable examples include the luxury CURV tower in Vancouver’s West End and the Chloe building on the west side. Some presale buyers at CURV have requested refunds on their deposits, as the developers owe over $90 million to lenders. The receiver is currently reviewing contracts to determine the next steps for these buyers.

Similarly, the receiver for the Chloe project is working to recover over $90 million owed to lenders and is preparing to sell 24 condo units at prices significantly lower than what some presale buyers initially paid. For instance, one-bedroom units that were priced at $1.1 million will now be offered for under $749,000.

Michael Ferreira, senior vice president at Anthem Properties, noted that land prices have surged, leading many developers to admit they may have overpaid for certain sites. He stated, "There is now a reckoning to get some semblance of normality on the land front."

As a result of these challenges, many developers are pausing plans for future projects. In July, the province introduced changes allowing developers to defer increases in development cost charges until projects are completed, which could help manage capital during construction. Ferreira remarked, "It’s stuff that we would never have seen from different levels of government in previous years."

However, he emphasized that these measures are only minor adjustments and do not significantly address the core issues affecting project viability. Ferreira suggested that re-evaluating aspects of the foreign buyers taxes and bans implemented after the market boom may be necessary. He highlighted the broader impact of the downturn, stating, "It’s not just a developer who has a fancy suit and drives a fancy car. It’s everybody he hires and all the trades and suppliers. I’ve got a friend who is a partner in a construction company and they just had to do layoffs for the first time in 23 years he’s been there."