Colliers Residential MarketShare Q3 - 2011

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Colliers Residential Q3 2011 Report on New Multi-Family Home Sales

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Colliers Residential MarketShare Q3 - 2011

  1. 1. MarketShareTHIRD QUARTER 2011A COMPREHENSIVE ANALYSIS OF THE RESIDENTIALREAL ESTATE MARKET IN THE VANCOUVER LOWER MAINLANDOCTOBER 2011
  2. 2. TABLE OFCONTENTS WELCOME TO MARKETSHARE 1 RESEARCH METHODOLOGY 2 OVERALL – MARKET SUMMARY 3 MARKET SUMMARIES Vancouver – Downtown 4 Vancouver – West 5 Vancouver – East 6 Richmond/South Delta/Tsawwassen 7 Burnaby/New Westminster 8 North Shore: North Vancouver & West Vancouver 9 Tri-Cities: Coquitlam, Port Coquitlam & Port Moody 10 Ridge Meadows: Maple Ridge & Pitt Meadows 11 Surrey Central/North Delta 12 South Surrey/White Rock 13 Cloverdale/Langley 14 WHAT TO WATCH 15 THIRD QUARTER 2011
  3. 3. WELCOME TOMarketShareAs our team gathered to review and discuss our view Finally, as I mentioned in the last edition of MarketShare we have committed to a long-term approach in building sales distribution channelsof the markets this past quarter, we were again in China for both Vancouver and Toronto developers to satisfy what weinspired to see such buoyant activity in Toronto and believe will be sustained demand. We are increasing the size of our teamsVancouver while economies around the world are in this market, investing in technology, people development andexperiencing such volatility. communication infrastructure and building multiple partnerships with banks, immigration agencies as well as with other real estate agencies.The global macroeconomic view continues to lean towards the negative Our aim is to be the ‘go to’ organization for Canadian real estate in China.side. Depending on which economist you follow, the U.S. and Europe will This year our teams in Hong Kong, Singapore and China have already soldresolve their current issues soon and the world will ‘get back to business’ over USD $400 million of UK and Australian product. Together we areor, they won’t. How the U.S. and multiple countries in Europe can run their now expanding the market for Canadian product. We believe the bestfinances into the ground with debt is simply mind-boggling (where’s their approach to maximize success for Canadian developers in China is aproforma?). What is even more amazing is that when they try to address the long-term sustained approach as opposed to a “launch and leave”. Forproblems, political partisanship and self-interest seemingly get in the way of the right projects, we believe this is a long-term sales channel forconstructive and corrective action. Canadian real estate but it is not a quick fix problem project solver.While the global economy continues to experience many issues, the In summary, while the global economy has caused angst over the pastVancouver Lower Mainland real estate market continues to demonstrate month or so the Vancouver Lower Mainland real estate market continuesresilience and reinforces that ‘this is the place to be’ for real estate to perform steadily and assuming no major global economic meltdown wedevelopers. Low interest rates and an influx of new buyers into the market expect it to continue.will help to sustain this resilience. With current global economic challengesexpected to keep interest rates low into the foreseeable future, the I hope you enjoy this edition of MarketShare and as always we welcomeVancouver Lower Mainland is a great place to be a real estate buyer as well. your thoughts and comments.Looking ahead, we do however see challenges in the local marketsurrounding the need for affordable housing options. In talking to ourcolleagues in land sales the limited supply of quality new development sitesis resulting in escalating land prices. The higher the price for land, thegreater the price the buyer will be required to pay. At the same time thenumber of active and planned projects may push construction costs higher, Greg Ashleyagain resulting in higher sales prices for the buyer. This situation will PRESIDENT AND MANAGING PARTNER,necessitate innovation. We are beginning to see this innovation on the COLLIERS INTERNATIONAL RESIDENTIAL MARKETINGdevelopment side - more efficient floor plans and reduced parking being twoof them. If one lives close to transit or downtown and does not require a carwhy does a developer have to build or provide the buyer a parking space?And if one does have a car, there are under-utilized parking structures thatwould be happy to offer long-term leases as an option to purchasing aresidence without parking. Our team is currently working on an innovativeproject in Chinatown that offers exactly this.THIRD QUARTER 2011 1
  4. 4. RESEARCHMethodologyUrban Analytics (UAI) is Metro-Vancouver’s leading buildings/projects. In all instances active sales range quoted in tables is defined as “The active sales range in which 75 percent of sales of this productsource for analytical interpretation of relevant real type occurred”.estate market data, trends and strategicrecommendations. This quarter we were also interested to find out how the rejection of the HST and the ensuing uncertainty was impacting the new home market.Urban Analytics Inc. (UAI) was engaged by Colliers to provide aggregate We found that the impact has been modest on lower priced product.data on the multi-family residential real estate market in the Vancouver However, product priced between $525,000 and $1 million that completesLower Mainland. prior to February 2013 appears to be getting hit the hardest. That said, most end-user buyers (and many realtors) seeking product priced underThe methodology used to collect the data was as follows: the $525,000 threshold simply don’t understand how the tax applies. SoGENERAL PARAMETERS to avoid the confusion and encourage purchasing, many developers areVancouver Lower Mainland refers to the area from West Vancouver to now including the HST in the price. The provincial government mustAldergrove. The focus of this study is limited to the multi-family market. provide clarity on this issue swiftly.MULTI-FAMILY PROJECT DATA – NEW HOME SALES Finally, with the continued “bubble” talk by economists based thousandsThe primary method used to collect information is a personal visit to each of miles from here, our analysts made a conscious effort to determine theproject being actively marketed. In addition to collecting current sales amount of standing inventory and assess whether these concerns areinformation, UAI representatives engage on-site sales staff to determine warranted. We do not think they are as a) inventory levels do not presentadditional relevant information such as incentive offerings, traffic trends and a concern at this time, b) any speculative buying that is typical of aactive buyer profiles. In all instances active sales range quoted in tables is growing bubble represents a microscopic fraction of the total buyingdefined as “The per square foot sales range in which 75 percent of sales of this activity taking place today and c) investors are taking a much longer termproduct type occurred”. approach with their purchases, unlike 2006 to 2008 when most investors had no intention – and in many cases no ability – to close on theirFor the purposes of the MarketShare publications, UAI contacts various purchases.municipal planning departments along with developers (and/or theirrepresentatives) of proposed new developments to determine the We hope you find this aggregate data combined with Colliers’anticipated timing of their approval and marketing launch. analysis, observations and opinions thought provoking.MULTI-FAMILY PROJECT DATA – RESALEThe resale market provides an important barometer from which to assessdemand and determine pricing for new home projects. Accordingly, UAI Michael Ferreiraclosely monitors the resale market for multi-family homes in order to PRINCIPAL, URBAN ANALYTICS INC.identify trends that are relevant to the new home sector. However, thebreadth and depth of product for sale can create findings that are less thanhelpful to the new home developer. As a result, UAI recommends studyingonly product that is aged ten years or newer and valued at less than $1.2million. While it could be argued that limiting the analysis to newer product urban A N A LY T I C S I N C(i.e. five years or newer) would be more relevant to the new home sector,we believe this would limit the sample size and potentially skew the datatowards a specific type of product available in a small number of specific www.urbananalytics.caTHIRD QUARTER 2011 2
  5. 5. OVERALL – SUMMARYVANCOUVER LOWER MAINLANDAs expected, Third Quarter sales were slower than the previous two quarters. Finally, given the slower season and increased competition in marketsHowever, even accounting for the usual seasonal dip in sales during this where the predominant buyer is an end user, such as Langley/Cloverdalequarter, a total of 2,315 units were sold which is up 40 percent from the same and Central Surrey/North Delta, a number of projects offered price-quarter in 2010. Year to date, 9,681 units have been sold, or 108 percent of reducing incentives while other of more centrally located projects worked2010’s total sales volume. Our prediction of 12,000+ units sold in 2011 to generate sales through increased realtor commissions.appears to be attainable. RESALE MARKET:Sales at new and high profile projects in False Creek, UBC, South Vancouver, This past quarter, 1,792 multi-family homes were sold on MLS. Sales wereRichmond, Coquitlam, and South Surrey contributed greatly as did continued up 48 percent over this same period last year. The increase was across alldemand for townhome product in all markets. Reasonably strong traffic and product types with high rise representing the lowest increase at 22 percent,sales activity during the first part of the quarter was reported. However, low rise sales increasing by 70 percent and townhome sales increasing bytraffic and sales slowed towards the end of August and through September. 76 percent. However, when compared to the torrid pace of the Second Quarter, sales were off 30 percent as a whole. Overall Third Quarter salesOverall unsold inventory levels in the Lower Mainland were reduced by were distributed across all product types as indicated in the following table.approximately 10 percent in the Third Quarter relative to Second Quarter ofthis year. Like many buyers, Mainland Chinese investors and end users were HIGH RISE LOW RISE TOWNHOME TOTALSsomewhat less active overall except for in key markets such as UBC. Total Third Quarter Sales 722 478 592 1,792Surprisingly, the first time or entry level buyer remained active takingadvantage of developer incentives and low interest rates. Total Active Listings 1,961 1,403 1,458 4,822NEW HOME MARKET: THE QUARTER AHEAD:In the Third Quarter 36 percent of sales occurred at high rise projects, which is The Fourth Quarter of 2010 proved to be the most active sales period fora 20 percent decrease compared to the previous quarter. Low rise sales that year. This year, we think that it is unlikely we will see the same numberrepresented 38 percent of sales, which is up 12 percent from the previous of sales due to the limited number of projects likely to launch in the Fourthquarter while townhome sales increased by 6 percent to 26 percent. Of the Quarter. We do however, still expect a positive quarter and continue to7,067 units of inventory available to purchase 2,130 are complete with three project annual sales of 12,000+ units.projects accounting for approximately 31 percent of the completed and unsoldinventory. Active projects decreased by approximately 2 percent. Overall ThirdQuarter performance across all product types is summarized in the followingtable. HIGH RISE LOW RISE TOWNHOME TOTALS Total Third Quarter Sales 825 893 597 2,315 Total Inventory 3,484 2,404 1,179 7,067 W. Scott Brown Total Number Of Projects 80 99 94 273 SENIOR VICE PRESIDENT, WESTERN CANADA COLLIERS INTERNATIONAL RESIDENTIAL MARKETING Note To Reader - At the end of this report we have included a commentary on ‘What to Watch’Like any typical summer there were a limited number of higher profile new and invite you to read our thoughts on the future of the Lower Mainland market. In comingproject launches. These included: Concord Pacific/Millennium’s quiet and editions, we will provide additional insight to the market through our ‘What to Watch’ commentary, critiquing our earlier assumptions and sharing your views.successful release of Alexandra in the West End; China based ModernGreen’s UBC offering YU; Bastion’s re-launch of Opsal Steel, ForresterHomes’ Granville Mews; Townline’s Magnolia at the Gardens; and,Springbank’s Bloom.THIRD QUARTER 2011 3
  6. 6. MARKET SUMMARYVANCOUVER – DOWNTOWN The ‘green light’ rating for Vancouver - Downtown is largely the result of the limited supply of product, the wildly successful response to the Alexandra project in the West End, and the continued steady absorptions at most existing pre-construction projects. A healthy supply of higher-end new and resale condominiums in this market has resulted in more moderate absorptions in this sector.NEW DEVELOPMENTS - Q3 2011MARKET HIGHLIGHTS: Q3 NEW RELEASES AND PROJECTED Q4 NEW RELEASES t ll S nS we* The positive response to the Concord/ nm a Bid De Me CANADA St PLACE Millennium offering Alexandra in the West ero W lvi lle St Ge ard Projected Q4 C St org End (75 of 85 units sold with little to no ola ia Q3 release Nic St St Du ns Co advertising at average sale values upwards Ha Bute mu W rd ov rw ir S Ha aSW oo t t Ne W sti t ater dS t Pe t olaS nS lso nd ng of $950 per square foot) illustrates the level Nic gh to Pe Co mo nS t er St sS t ou St Br s n dra xS of demand for well-located and optimally rvi ll S t Je St t te HIGH RISE Bu St St positioned product. low St rn by St St ha rds K Pa ur Ho St cifi Th we vil le Ric r nS t me Be cS St Ho ran ilto d Ho ac t d G t Blv* City-imposed moratorium on new LOW RISE rar am ie S hA ur H po B mb y St Ex ve GM Ca t at BC PLACE PLA development approvals in the West End will Be T St Da STADIUM TOWNHOME DS ur vie RAR mo St lvd further exacerbate the demand/supply BUR GE y cB BRID Se cifi Pa T ES imbalance for the foreseeable future in the VIL L AN E Maps for illustrative purposes GR RIDG Vancouver – Downtown market. only. Locations are approximate. B* There are now five completed projects with NEW PROJECT MARKET STATUS a combined total of 76 units of standing Q3 ACTIVE Q3 Q3 ACTIVE SALES PRODUCT inventory. PROJECTS SALES SUPPLY RANGE ($ PSF) High Rise 13 155 483 $690 - 710 Low Rise n/a n/a n/a n/a Townhome n/a n/a n/a n/aMLS RESALE - Q3 2011 MLS RESALE MARKET STATUS (product less than 10 years of age)MARKET HIGHLIGHTS: ACTIVE LISTINGS SOLD INVENTORY* Overall months of supply is 6.7. This is up MONTHS % OF TOTAL AVG. DAYS ACTIVE SALES RANGE from 4.6 in the Second Quarter of 2011. PRODUCT LISTINGS OF SUPPLY # SOLD* $ PSF ON MARKET (75% of sales) High Rise 527 6.7 235 100 $707 38 $364,000 - 828,000* Overall sales were up 11 percent compared to this same quarter in 2010. Low Rise n/a n/a n/a n/a n/a n/a n/a* Average sale price of $707 per square foot Townhome n/a n/a n/a n/a n/a n/a n/a - this is 5 percent higher than during the Change over the last quarter: Increase, Decrease, No Change * % of Total is the percentage of product sold under ten years of age relative to the total sold for each product category Third Quarter of 2010. MLS RESALE BY UNIT TYPE AVG. PRICE $ PSF AVG. PRICE $ PSF PRODUCT 1 BEDROOM 2 BEDROOM High Rise $439,283 $692 $707,254 $721 Low Rise n/a n/a n/a n/a PRODUCT 2 BEDROOM 3 BEDROOM Townhome n/a n/a n/a n/aTHIRD QUARTER 2011 4
  7. 7. MARKET SUMMARYVANCOUVER – WEST The ‘green light’ rating applied to the Vancouver - West market remains. While sales at most of the actively marketed projects remain steady, the amount of product contemplated for the South East False Creek neighbourhood over the next two to three years will make this a highly competitive market for the foreseeable future. Vancouver - Downtown product remains in higher demand than product in South East False Creek. That said, sales success at Kits 360 and 6th + Fir illustrated the strong demand for product in the Kitsilano and Burrard Slopes areas. NEW DEVELOPMENTS - Q3 2011MARKET HIGHLIGHTS: Q3 NEW RELEASES AND PROJECTED Q4 NEW RELEASES Point G rey Rd Cornwall St* The positive response to the latest We 4th Ave W Gr sb University of e at Nor the r oo condominium offering at UBC’s Wesbrook British Columbia 10th Ave W BROADWAY W kM Projected Q4 all community, Modern Green’s YU, illustrates 12th Ave W Q3 release 12 16th Ave W the continued appeal of this neighbourhood Arbutus St Dunbar St Crown St Macdonald St Blenheim St SW M to the new immigrant Chinese buyers. King Edward Ave ar in Dr e* There are indications the Mainland Chinese 33rd Ave W 33rd Ave HIGH RISE Buyer has discovered The Village on False W Boulevard 41st Ave W Creek. Several units were sold to this buyer GRANVILLE STREET 41st Ave LOW RISE group during the Third Quarter. Main St Cambie St Fraser St 49th Ave W TOWNHOME Oak St* Local developer interest in assembled 57th Ave W 57th A properties along the Cambie Corridor has C.P.R Maps for illustrative purposes apparently cooled in light of some seemingly . SE Marine only. Locations are approximate. 70th Ave W Kent Ave N O irrational land sale values attained earlier this year. NEW PROJECT MARKET STATUS Q3 ACTIVE Q3 Q3 ACTIVE SALES* Marine Gateway at the foot of Cambie Street is PRODUCT PROJECTS SALES SUPPLY RANGE ($ PSF) anticipated to launch in the First Quarter of High Rise 18 226 948 $680 - 750 2012 rather than in the Fourth Quarter of this Low Rise 3 6 14 $600 - 680 year. Townhome 3 3 50 $670 - 700 MLS RESALE - Q3 2011 MLS RESALE MARKET STATUS (product less than 10 years of age)MARKET HIGHLIGHTS: ACTIVE LISTINGS SOLD INVENTORY* Active listings for low and high rise product MONTHS % OF TOTAL AVG. DAYS ACTIVE SALES RANGE increased by 43 percent compared to the PRODUCT LISTINGS OF SUPPLY # SOLD* $ PSF ON MARKET (75% of sales) Third Quarter of 2010. High Rise 172 8.5 61 43 $723 41 $309,900 - 940,000* At the same time, overall sales have Low Rise 125 7.1 53 38 $706 51 $427,000 - 796,600 increased by 81 percent compared to the Townhome 52 5.8 27 19 $663 26 $575,000 - 1.1M Third Quarter of 2010. Change over the last quarter: Increase, Decrease, No Change * % of Total is the percentage of product sold under ten years of age relative to the total sold for each product category* The townhome sector showed the strongest sales increase compared to this same MLS RESALE BY UNIT TYPE quarter last year. This helps explain the low AVG. PRICE $ PSF AVG. PRICE $ PSF ‘average days on market’ for townhome PRODUCT 1 BEDROOM 2 BEDROOM product. High Rise $391,383 $643 $785,205 $758 Low Rise $432,950 $659 $649,891 $717 PRODUCT 2 BEDROOM 3 BEDROOM Townhome $805,321 $665 $952,303 $671THIRD QUARTER 2011 5
  8. 8. MARKET SUMMARYVANCOUVER – EAST Limited supply of new multi-family home product is the primary reason for the continued ‘green light’ rating for this market. The Main and Fraser Street corridors continue to attract new home buyers seeking more affordable pricing in quickly gentrifying areas. Developers contemplating new projects in Vancouver - East should be conscious of the fact buyers are typically seeking greater value here relative to more established Vancouver - West neighbourhoods. NEW DEVELOPMENTS - Q3 2011MARKET HIGHLIGHTS: Q3 NEW RELEASES AND PROJECTED Q4 NEW RELEASES morial Bridge* Polygon continues to receive a very positive St an nm McGill St response to its New Water development at De Eton St Da cific Projected Q4 Dundas St vie the River District. Pa Q3 release St HASTINGS STREET E St Willingdon Ave Parker St Gilmore Ave* The execution and marketing of many of the Venables St Holdom St Clark Dr low rise projects located along Kingsway has Gr 1st Ave e at Nor thern Wy been poor. HIGH RISE BROADWAY E 12th Ave W 12th Ave E* Panther Constructors Ltd. is set to launch its Grandview Hwy LOW RISE Nanaimo St KIN Canada Wy Renfrew St GS Rupert St first residential project, The Flats at 219 WA Wayburne Dr King Edward Ave Y Kincaid St Spro Georgia East, early in the Fourth Quarter. TOWNHOME Collingwood Moscrop St This innovative project is the first of its kind 33rd Ave W 33rd Ave E Deer Lake Pk for Chinatown. 41st Ave W Burke St Maps for illustrative purposes TREET 41st Ave E Gran only. Locations are approximate. ge S t* Two Vancouver - East areas that will see increased development activity in the coming NEW PROJECT MARKET STATUS quarters are Chinatown and a large land Q3 ACTIVE Q3 Q3 ACTIVE SALES PRODUCT PROJECTS SALES SUPPLY RANGE ($ PSF) assembly adjacent to the Collingwood Village High Rise 2 27 120 $580 - 630 community near Kingsway and Boundary. Low Rise 16 130 185 $480 - 530 Townhome 4 6 39 $450 - 500 MLS RESALE - Q3 2011 MLS RESALE MARKET STATUS (product less than 10 years of age)MARKET HIGHLIGHTS: ACTIVE LISTINGS SOLD INVENTORY* Average sale values for high rise product MONTHS % OF TOTAL AVG. DAYS ACTIVE SALES RANGE increased 8 percent over the Third Quarter of PRODUCT LISTINGS OF SUPPLY # SOLD* $ PSF ON MARKET (75% of sales) 2010. High Rise 107 7.8 41 39 $554 34 $328,888 - 557,500* Active listings increased by 9 percent Low Rise 117 8.8 40 38 $479 72 $288,000 - 448,000 compared to the previous quarter. Townhome 59 7.1 25 24 $484 35 $522,000 - 765,000* Overall sales were up 45 percent compared to Change over the last quarter: Increase, Decrease, No Change * % of Total is the percentage of product sold under ten years of age relative to the total sold for each product category the Third Quarter of 2010 - much of which can be attributed to higher sales activity in the low MLS RESALE BY UNIT TYPE rise condominium sector. AVG. PRICE $ PSF AVG. PRICE $ PSF PRODUCT 1 BEDROOM 2 BEDROOM High Rise $396,863 $569 $523,974 $551 Low Rise $329,487 $476 $398,114 $483 PRODUCT 2 BEDROOM 3 BEDROOM Townhome $588,110 $492 $692,109 $484THIRD QUARTER 2011 6
  9. 9. MARKET SUMMARYRICHMOND/SOUTH DELTA/TSAWWASSEN Richmond retains its ‘green light’ rating as a result of the continued strong absorptions of high and low rise condominium product. The lack of new product releases in the Third Quarter also resulted in very little movement in achievable sale values. Developers contemplating new product here should be aware of the considerable amount of condominium product proceeding through the planning process, and design and position their projects appropriately. NEW DEVELOPMENTS - Q3 2011MARKET HIGHLIGHTS: Q3 NEW RELEASES AND PROJECTED Q4 NEW RELEASES y W Vulcan er* The most notable project launch of Third Russ Bak Alderbridge Wy RICHMOND ANNACIS HIGHW Quarter was Townline’s The Gardens low rise River Rd Projected Q4 project on the former Fantasy Gardens Westminster Hwy Q3 release C.N.R. property. The positive response to the No 8 Rd No. 7 Rd Granville Ave project’s first phase will likely result in the THRUWAY Blundell Rd launch of Phase II during the Fourth Quarter. No. 1 Rd Gilbert Rd No. 3 Rd No. 4 Rd No. 5 Rd No. 6 Rd Railway Ave Garden City Rd HIGH RISE Francis Rd FRASER - DELTA* Slower absorptions in the high rise product T category can be attributed to the lack of LOW RISE Williams Rd I H product launches in the market area. Most TOWNHOME Steveston Hwy r Rd Rive pre sale offerings for this product type are No. 2 Rd Steveston Shell Rd nearing the end of their respective sales Moncton St Maps for illustrative purposes campaigns. Ge or only. Locations are approximate. ge M t a* Note that the Quintet sales office has now NEW PROJECT MARKET STATUS closed to allow for the start of construction. Q3 ACTIVE Q3 Q3 ACTIVE SALES PRODUCT Nearly 650 of the approximately 700 units in PROJECTS SALES SUPPLY RANGE ($ PSF) this five-tower development are sold. High Rise 9 147 456 $540 - 590 Low Rise 7 119 204 $430 - 470 Townhome 14 31 126 $375 - 425 MLS RESALE - Q3 2011 MLS RESALE MARKET STATUS (product less than 10 years of age)MARKET HIGHLIGHTS: ACTIVE LISTINGS SOLD INVENTORY* Overall active listings are up 21 percent MONTHS % OF TOTAL AVG. DAYS ACTIVE SALES RANGE compared to the Third Quarter of 2010. PRODUCT LISTINGS OF SUPPLY # SOLD* $ PSF ON MARKET (75% of sales)* Months of supply for high rise product is 11. High Rise 308 11 84 38 $521 66 $333,000 - 613,500 This is up from 9 in the Third Quarter of last Low Rise 144 9.2 47 21 $445 51 $339,900 - 529,900 year. Townhome 225 7.6 89 40 $410 49 $480,000 - 731,000* Demand for townhome product remains Change over the last quarter: Increase, Decrease, No Change strong. * % of Total is the percentage of product sold under ten years of age relative to the total sold for each product category MLS RESALE BY UNIT TYPE AVG. PRICE $ PSF AVG. PRICE $ PSF PRODUCT 1 BEDROOM 2 BEDROOM High Rise $352,639 $520 $484,204 $520 Low Rise $337,686 $500 $427,951 $442 PRODUCT 2 BEDROOM 3 BEDROOM Townhome $484,414 $395 $598,749 $410THIRD QUARTER 2011 7

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