A few years ago, people lined up to buy condos before they were built. Now developers are handing out cars. On October 23, The Globe and Mail reported that B.C. builders with unsold homes are getting more creative, and more generous, to bring buyers through the door.
If you're shopping for a new condo or townhouse in Greater Vancouver or the Tri-Cities, BC, that's useful leverage. It also means you need to read every offer carefully.
What developers are offering
The Globe's Kerry Gold lists a few examples from Polygon Homes:
- A $100,000 electric BMW, or the cash instead, for buyers of select units in the 22-storey Elle tower in North Vancouver.
- A $25,000 incentive at Cooper Meadows in Abbotsford for firefighters, police officers, nurses, teachers and other front-line workers.
- A subsidy on the first three years of financing at its completed Lennox project, and a similar mortgage helper in Squamish.
- A fully outfitted garage with storage and e-bikes worth about $30,000 at a Squamish townhome project.
Wesgroup also ran a "try it before you buy it" weekend in a furnished show suite at the Ace on Commercial Drive. Only buyers already approved for financing were picked.
Polygon's CEO, Neil Chrystal, estimates new home prices have fallen 15 to 30 per cent, depending on location. He told the Globe that "many builders are selling their homes below cost." Wesgroup's Joey Coupland said some of these new sales tactics are likely to stay even after the market improves.
Why this is happening, including here
The resale numbers tell the same story. Greater Vancouver REALTORS® says apartment sales in Metro Vancouver fell 18.6% in September from a year earlier, and the apartment benchmark price was $682,500, down 6.2%. I wrote about that in my post on September's condo-led slowdown.
Closer to home, local reporting on CMHC data counted 814 completed but unoccupied condos in Coquitlam as of August, many of them in Burquitlam. Port Moody had 73 and Port Coquitlam had 7. SFU's Andy Yan said the number of unsold condos in Coquitlam is the highest in 36 years.
So when you walk into a Coquitlam or Port Moody sales centre right now, the builder may well have finished units to move.
What this means for you
If you're buying a new home, here is how I'd approach an incentive:
- Compare the net price. A car or a credit is nice, but a lower purchase price can also mean a smaller mortgage and down payment. Ask what the price would be without the perk, and get it in writing.
- Check what happens after a mortgage subsidy ends. If a builder covers part of your financing for three years, know what your full payment will be in year four, and make sure it fits your budget then.
- Look at resale comparables. Compare the price per square foot with similar recent sales in the same area, not just the original price list.
- Ask your accountant and lender how a cash incentive or credit is treated, before you sign. I'm not a tax advisor, and the details matter.
- Know your rights on a new build. Read the disclosure statement and contract with your lawyer, and confirm the home warranty coverage.
If you're a newcomer thinking about buying soon after you arrive, a slower new-build market gives you time to compare, but don't rush into a purchase just because a perk expires on Friday. Many people rent first while they learn the area. My guide to relocating to Greater Vancouver walks through that, and if you need a place lined up before you land, see my relocation rental service for tenants.
If you're selling a resale condo, remember you're competing with these builder offers. Price and presentation matter more when a buyer can drive down the street and get a credit or a mortgage helper.
Want a second opinion on a builder's offer?
Incentives change week to week, and every contract is different. If you're looking at a new condo or townhouse in Coquitlam, Port Moody or Port Coquitlam and want someone on your side to compare it with resale options, have a look at how I help home buyers, or call or text me at 604-809-1032.