Metro Vancouver has just experienced the largest quarterly presale inventory release since mid-2022, according to a recent report by real estate sales and marketing firm MLA Canada. The second quarter of 2024 saw a significant influx of new units hitting the market, with varied absorption trends across the region.
In Q2 2024, around 5,850 units were released: 1,600 in April, 2,000 in May, and 2,250 in June. This surpasses the supply release of over 3,000 units in October 2023 and is comparable to Q2 2022, which saw approximately 5,900 units released.
However, despite this surge in inventory, sales velocity in the presales market has been slow. Demand, as measured by the number of units sold and same-month absorptions, was higher in previous quarters than in Q2 2024. MLA Canada notes that while same-month absorptions were notably high at the start of the year, fueled by projects that had been previewing for months, absorption rates began to decline by May and June. This decline can be partly attributed to the seasonal shift from the active Spring market to the slower Summer months.
Overall, in the first half of 2024, the Lower Mainland saw an average same-month absorption rate of 33%, with 2,848 units sold out of 8,593 released units across 68 projects. Interestingly, the Fraser Valley outperformed the Greater Vancouver region, with more units sold (1,631 out of 4,546) and released than Greater Vancouver (1,217 out of 4,047). The Fraser Valley’s higher sales-to-listings ratio, at around 36%, compared to Greater Vancouver’s 30%, is largely due to its more competitively priced offerings.
Due to reduced sales velocity, developers are extending the length of sales campaigns, and sales teams are no longer seeing towers sell out within weeks of launch. This has led to increased competition among developers, resulting in more options and incentives for prospective buyers.
Looking ahead, MLA Canada projects 10,500 units across 42 more launches in the second half of the year, with an average same-month absorption rate of 35%. Although this level of activity is an improvement from 2023, it remains below historical norms and is expected to align with slower years.
“Presale buyer urgency is low, and almost every deal involves negotiations, especially at the higher end of the pricing spectrum,” said MLA Canada’s Director of Advisory Garde MacDonald. “We foresee that the remainder of the year will build on existing trends. While we anticipate a seasonal upswing in the Fall, the market outlook for H2 2024 does not look markedly different from today.”