November 23, 2015
Vancouver Smart Condo Investing: Speculating on Presales
Here's my tip for my clients: Look at markets where old condos sell for more than new.
The new condominium market in Metro Vancouver is sizzling hot and prices of new concrete condos, one of the most favourite type for investors, have reached record levels these days.
Yet, there remains room for investor to get in and get out of the new high-rise condominium market quickly and with a tidy profit. This strategy has been rare over the past few years because new condominium prices were fairly stable. That has changed in recent months.
There’s an opportunity here for investors: the buying and selling of presale condominiums, or assignments, while the tower is ascending.
The average new concrete condominium in downtown Vancouver is now selling for $1,100 per square foot. It is $825 per square foot along most of the Cambie Corridor, $620 to $650 per square foot in Burnaby $600 per square foot in North Vancouver’s Lower Lonsdale area, and $500 per square foot in New Westminster, as some examples.
Yet, these record-high prices are all expected to increase because of the rapidly accelerating cost of land zoned for condominium development. We won’t go into who is buying and where, but suffice to say that land costs are about double what they were two years ago when most of the current condominium towers were being planned.
So, how do you decide where to buy a presale high-rise condominium
Look in neighbourhoods where the current resale condominiums have a higher price than the presale prices of new condominiums. This gives both an indication of potential price appreciation and market demand in that area.
As of September, 2015 Metro Vancouver condominium apartment prices were up 9 per cent from a year earlier, to a benchmark of $419,000 and sales had soared 28.7%, reports the Real Estate Board of Greater Vancouver.
Dig down, though, and we find sub-markets where resale condominium prices are rising faster than the average, and where older apartments are selling for more than new condos, based on per-square-foot values.
In Burnaby’s Metrotown, for example, the average resale condominium sells for $705 per square foot, but the average new condominium tower is preselling for $650 per square foot.
In Richmond, resale condominium prices average $614 per square foot, but new condominiums are selling for an average of $575 per square foot.
Lower Lonsdale in North Vancouver is another example. Here, the average resale condominium sells for $744 per square foot, but new concrete condominiums are preselling for $600 per square foot.
Happy hunting, my dear investors. But don't forget to call your Realtor, Oleg Tsaryov to get an advice from the real estate expert how to buy SMART in Vancouver.