Surrey condominium developers are offering some sweet incentives to pre-sell new condos to investors who now account for a huge share of sales.
Overall sales of Surrey condos are down 12 per cent for the first four months of this year compared to the same time in 2011. Average condo prices in Surrey are now lower than five years ago and some brand new Surrey condominiums are being pre-sold for less than $120,000. Yet more new condo and townhome units were started in Surrey in April – 282 – than in the City of Vancouver.
Also, nervous lenders now want to see 30 per cent to 40 per cent of condo units sold in pre-sales before they will advance construction funds, and lenders are also looking at the quality of the buyers.
A big change is that many lenders will now only consider one unit sold if a single pre-sale investor buys multiple condos in the same project. Lenders are also digging down into pre-sale paperwork to be sure buyers have actually put up the cash downpayments of from 15 per cent to 30 per cent of the purchase price and are qualified to make payments.
Developers are battling back with deals.
In a May 19 promotion at Surrey’s Ascend in Whalley, the project sold 96 per cent of its 108 units in an hour. Sales agents estimate that at least half of the buyers were investors. The Ascend, a low-rise project by Premier International Developments Ltd., priced condos from $118,800 and Premier paid down the mortgage rate so buyers had to pay only $199 per month for the first three years on a typical bachelor suite. Such suites would rent in the $750 per month range.
At North Surrey’s The Wave, a 500-unit, twin-tower project and the largest in the Valley, one third of the 3,350 potential buyers who have registered (pre sales actually start in early June from $179,000) are first time buyers, one-third are investors and one-third are “parents buying for their children”, according to marketer Bill Morrison, president of Pilot House Real Estate Inc.
