Developers in Metro Vancouver are facing intense criticism over the sale of presale condominiums to foreign buyers amidst a housing and affordability crisis.
Because presale condominiums are only subject to B.C.’s foreign buyers tax upon completion, they are an attractive investment for foreign buyers who can flip or assign the unit at a substantial (tax-free) profit. The recent run up in prices means units bought at presale three years ago are selling for nearly double the original price — plus GST.
It’s a frustrating situation for local buyers looking to get into the housing market, competing against foreign buyers to secure units in upcoming projects, which can sell out in days, sometimes hours due to high demand.
The developer of an upcoming midrise condominium in East Vancouver’s Norquay Village is hoping to alleviate this frustrating situation with a “Locals First” marketing campaign.
The Windsor is a 126-unit project currently selling on Kingsway, and the developer, Imani Development Corporation, reports swift sales despite giving priority to local buyers.
The developer, and Key Marketing have been keeping track of buyers at the project, and say that out of 88 homes already sold, only one was sold to a buyer who is not a local resident.
Their survey of presale buyers also found:
- 71 per cent indicate English as a first or primary language
- 80 per cent of buyers plan to live in the home
- 30 per cent are first-time homebuyers
- 60 per cent are married
- 20 per cent are married with children
The “Locals First” system was developed by Key Marketing, a Vancouver-based real estate firm.
“In an effort to help resolve some of the issues faced by locals, we designed and tested a new way of doing business in condo presales — and buyer data shows it worked,” said Cam Good, president and managing broker of Key Marketing.
The program gives priority access to Canadian citizens and people with proven permanent residency status. Foreign buyers are still allowed to purchase, but only with the condition that the deal may be legally collapsed within 90 days if a local purchaser wants the unit.
Good is proposing real estate developers implement a Locals First system across all new condo projects, with a ratings system based on how much inventory is reserved for local buyers.
He says that measures could also be put in place curbing bulk sales, assignment flipping, and speculative buying that leads to price escalations.
“The situation is beyond critical and developers have to respond to community needs,” said Good. “If real estate developers don’t initiate something to solve access and affordability for local buyers, governments will force solutions that may not be ideal.”
Developers Westbank and Bosa have both recently announced their own “Locals First” policies, with Westbank promising priority sales to locals at The Butterfly.
Bosa says their upcoming tower at 1500 West Georgia will also give local buyers first priority.