- What Court-ordered sales in Vancouver have been on the rise this year as alternative lenders bring foreclosure actions
- Why Parties with little experience snapped up land when rates were low and struggled to get their projects off the ground
- What next Prices are still in flux, but could see big impacts in the coming year
As court-ordered sales continue to make their way onto the listings pages in Vancouver, price discovery remains in flux, market players say.
Brad Newman-Bennett, a vice-president of capital markets at Cushman & Wakefield, told Green Street News that while there may be more court-ordered sales than usual, relatively few have actually changed hands. That’s because the market is still in “discovery mode” when it comes to pricing.
“We’re kind of bumping along the bottom at the moment,” Newman-Bennett said. “A lot of the groups that bought land in 2018-2021, when rates were super low, they’re the ones that are in a little bit of trouble right now.”
Many didn’t have much development experience and had difficulty getting their projects off the ground, he said.
Rock-bottom pricing
Several high-profile court-ordered sales that have closed in Vancouver this year have come at prices well below perceived value.
The so-called Pink Palace, a dormant hotel in Surrey, recently sold in court for $18m despite a valuation from 2022 placing its worth at $40m, even as high as $73m with renovations.
A development in Langley, The Willoughby, went for $35m, though the owner claimed it had an offer for $64m, according to local media.
Meanwhile, several court-ordered sales of land assemblies have sprouted up in the Oakridge area of Vancouver, a busy corridor with access to transit.
The foreclosures are being driven by holders of second and third mortgages, Newman-Bennett said, many of them alternative lenders.
But prime lenders, such as big banks, have not yet pulled the trigger on foreclosures. When they do, there could be more serious price implications, he said.
“Until they [banks] start feeling some pain, there isn’t going to be a fire sale,” he said.
Waiting to transact
While some of the ordered land sales are perfect for midrise, purpose-built rental buildings, it’s hard to predict if developers will start jumping on any bargains, Cynthia Jagger, a broker at Dexter Realty, said.
Capitalization rates, architectural fees and development costs have all gone up. The increases resulted in land prices easing down, Jagger said, which could be seen as an opportunity by some buyers.
“There were a bunch of groups that sat on the sidelines in 2021 and 2022 when there were a lot of trades happening,” she said. “Now they can see that land pricing has come down.”
Those lower prices have come alongside a push to build rental units from all levels of government, which have provided incentives.
Secure rental policies on arterial routes are what many developers are looking for, Jagger said, due to demand for such rentals.
“If you can assemble four single-family homes and build a five- or six-storey rental development, it’s pretty certain what you’ll get in terms of density,” she said. “And there’s a lot of demand for new rental housing for people who would like to live there.”
Newman-Bennett said that even if developers began pouncing on properties, a building boom wouldn’t happen overnight due to the length of time it takes to get permitting and other measures for developments approved in the region.
“You’re probably five years before you’re going to start seeing any completed product in the market,” he said. “And that’s just the reality.”
