Condo is King in the Royal City

As the weather warms up and BBQ season fully descends upon us, there is one conversation that seems to keep popping up. No, it’s got nothing to do with minority governments or when the NDP-Green Coalition will take power. The hot topic is our hot real-estate market!

Bosa is planning two new towers are planned for New Westminster waterfront.

What am I hearing? Mainly it’s about how prices have started to skyrocket again. But there is also a lot of chatter about the lack of affordability and how some people feel “trapped” in their single family homes – unable to sell them for fear if they do, they won’t be able to get back into the market. Based on what I’ve been witnessing lately, this does not appear too far from the truth.

While many thought the implementation of the foreign buyer tax in Metro Vancouver would be the solution to all of our real estate woes – clearly it was not. While sales and prices did stagnate for a short period, the market has since quickly adjusted to the “new normal”.

I hearken back to what my economics professor at the University of Manitoba repeatedly told our class – “It’s about supply and demand stupid.” Less supply + high demand = higher prices. Hard to argue with basic economics.

Two new condo towers will dramatically change the skyline in downtown New Westminster

The “new normal” looks a lot like the old normal of the last decade or so, but with a slight twist. It appears that condominium sales have been the biggest beneficiary of the rule changes.

After a conversation with a realtor friend of mine, I decided to head to downtown New Westminster to see what was really happening with our local real estate market.

There were four simultaneous open houses taking place in a 23 year old concrete tower complex on Agnes Street adjacent to the New Westminster SkyTrain station this weekend. So I decided to head there and have a look for myself.

When I pulled into the parking lot 15 minutes before the open house was about to begin, there had to be 20 people in line waiting to get inside. I naively thought the open house might only attract a handful of folks given this is the first hot, dry weekend in New Westminster this summer. But clearly I was off the mark.  An affordable condo trumps a warm sandy beach in these parts – 9 times out of 10.

Purchasing water views or waterfront in New Westminster is getting a lot more expensive these days

I had a chance to speak to several of the realtors and prospective purchasers about what is going on with Royal City real estate. It’s clear from those discussions that there is a wave of frustrated Vancouverites heading to the burbs in an effort to purchase their first home. In other words, real-estate refugees…fleeing a hyper-inflated market in Vancouver with the hope of finding something more affordable.

A one-bedroom was listed for $329,000 and I have no doubt the owner will get full asking price – if not more. While that may seem “cheap” in comparison to Vancouver pricing, you have to keep in mind similar units in that same building were selling in the low $215K range less than twelve months ago. This translates into a staggering increase of over $100,000 in value in less than a year.

It’s clear that condos have become king in our local real estate market. Especially when they are located next to rapid transit, shopping, the river and some great restaurants. It will be interesting to see what happens with the new Bosa waterfront development once they go for sale – I can’t imagine it will take long to sell out.

Downtown New Westminster is now clearly being impacted by what’s happening with crazy real estate pricing in Vancouver.  As they say – it would appear our little secret is out. That’s why buying a place with a view of the Fraser River in town is going to got a heck of a lot more expensive in the coming years.