Vancouver’s real estate market in the next 15 years will actually be two separate markets financed by one chequebook, real estate marketer and “condo king” Bob Rennie told an Urban Development Institute audience in Vancouver Thursday.
Those two markets will be downsizing, aging baby boomers on the one hand and their first-time-homebuyer kids and grandkids on the other hand. But in both cases, the purchases will be financed by the baby boomers, who will be selling their fully-paid-for single-family homes, Rennie predicted.
His remarks at the UDI annual general meeting came on the same day Colliers International reported a 45-per-cent drop in sales of new multi-family homes in Metro Vancouver for the first quarter of the year compared to the same period last year.
“The surge in sales activity that is typically expected during the first quarter of a year did not materialize in 2013,” Colliers’ first quarter MarketShare report stated. The 2,033 new multi-family home sales represented a six-per-cent drop from the fourth quarter of 2012.
Colliers said the major drop in new multi-family sales for the beginning of 2013 can be attributed to several factors, among them the fact that sales in the first quarter of 2012 were much higher than in previous years.
Nonetheless, the report describes the market as “somewhat stressed,” something Colliers attributes to softening investment demand for new multi-family homes and increasing supply on the market. Resales are down 17 per cent in the first quarter compared to a year ago, Brown said.
Colliers does not predict any drastic correction for the Vancouver real estate market. Looking forward, Brown said Colliers expects a modest increase in sales in the second quarter compared to the first.
The steep year-over-year drop certainly failed to dent Rennie’s enthusiasm for Vancouver real estate.
While there is short-term softening, Rennie told the development professionals that 590,000 newcomers will buy the clear-title homes boomers need to off-load over the next 15 years.
Rennie’s speech was interrupted by a visit from Premier Christy Clark, who also addressed the audience and thanked Rennie and developer Peter Wall for their support.
Vancouver real estate buyers are not entirely dependent on only their incomes to buy their homes, he noted. Just 4.9 per cent of Metro Vancouver residents make more than $100,000 a year, while 65 per cent earn less than $55,000 a year.
At Wall Centre Central Park, Rennie’s firm has sold 282 homes, mostly aimed at that 65 per cent, he said.
“The feds, Flaherty and the banks have a really hard time understanding the Vancouver real estate market,” Rennie said. “They’re asking how does a $50,000-a-year income find a $75,000 down payment.”
But Rennie said they’re getting those down payments from their parents and grandparents.
As for the controversy surrounding his less-expensive, scaled-down alternative to a high-end Vancouver Art Gallery replacement, Rennie said Vancouverites are more inclined to spend their leisure time outdoors climbing the Grouse Grind or walking the Stanley Park seawall.
“It’s a huge cultural observation to me and that’s why we have the difficulty — aside from population — in Greater Vancouver. We entertain naturally, which may account for the lack of big city venues,” he said. “We are just different.”
The public outcry over the closure of east-side cultural hub the Waldorf Hotel generated thousands of signatures of support, Rennie pointed out, while the VAG’s new-building petition garnered fare fewer, less than 400.
He said Vancouver should band together with its surrounding suburbs to work on issues like the homeless, affordable rental housing or the maintenance of Stanley Park.
“The region uses these facilities, they’re just in Vancouver. The brand is Vancouver and Vancouver is the franchise,” Rennie said. “Vancouver carries the weight of the region. As long as the region is letting the city solve its problems, it’s going to cost a lot more to do business in Vancouver.”
B.C.’s demographics will mean there are no forced sales, Rennie said, because most of the baby boomers have paid for their homes in full. Even if prices drop a bit, boomers will sell their homes as long as they can stay in the same community and live in a home that meets their needs, Rennie said.
“That has to change what we’re building, and who we’re building it for,” Rennie.
He gave an example of someone selling a Shaughnessy home who was asking for $6.9 million last summer, but settled for $5.5 million this year because the drop in price meant they could still move into a $2.5-million townhome in Shannon Mews on Granville Street, with money left over.
He said the boomers will be luxury shoppers, but also utilitarian buyers. He gave the example of dens, which he said boomers will demand be flexible — they will want a den that can be an extra bedroom, a family room or a dining room extension for large family dinners.
“They want more room, not more rooms,” Rennie said.
While they may be luxury shoppers when shopping for themselves, the boomers will seek convention before they write a cheque for their own children, Rennie said.
“They won’t pay for crazy lofts or crazy green initiatives,” Rennie said. “We have no precedent for this economy, and we have no precedent for this aging, iPhone-carrying demographic.”