Purchasing a pre-sale or ‘off-the-plan’ property in Vancouver gives you the opportunity to purchase property that has not been built yet. It can give you more time and flexibility to finance the purchase, may reduce some taxes, and allows you to make customisations to your property before it is even built! However purchasing pre-sale comes with its own set of risks to understand, and here’s what you need to know.
What Does Pre-sale Mean in Real Estate?
Pre-sales are a common component of the Vancouver Real Estate market. In its simplest form, you are pre-purchasing a property that is yet to be built (or in some cases in the early stages of construction).
For a lot of prospective buyers, a pre-sale condo is the most cost-effective way to enter the property market, as there are a number of advantages offered:
More time to accrue/obtain finance. When purchasing pre-sale, you only need to have your downpayment available. Depending on the contract there may be other smaller payments along the way, based on the schedule of construction. Generally, however, the entire payment is not due until the building is completed, which may provide a few extra years to save, and lower your mortgage amount to boot.
Depending on the state of the property market in Vancouver, your property may appreciate over the time that it is built.
Your downpayment and deposits are held in a lawyer’s trust account. This restricts the developer from accessing the funds until the building is complete.
New properties are subject to mandatory home warranties and insurance. This gives you a minimum of two years on the labour and materials, five years on the building envelope, and ten years on the structure of the building itself. By comparison, purchasing an existing property may not come with these warranties, which could increase the overall cost if you needed to rectify an issue.
You get a brand new home! Being involved from the start may give you the opportunity to customise the layout, finishes, colour scheme and more to make sure the property you move into is the one you want, from day 1.
What Are the Risks With Pre-Sale Property in Vancouver?
As with any investment or large financial purchase, there are inherent risks. When it comes to pre-sale property, however, there are a unique set of risks to understand.
Purchasing a pre-sale property as an investment is highly speculative. As these buildings can take years to complete, you are taking on the assumption that the property market will continue to appreciate, which may not be the case.
Even though the property market may change, you are usually purchasing your pre-sale condo at a premium to those currently available. This is because most pre-sale developments price their condo’s on the assumption that property prices will increase, not decrease. As a result, you may pay up to 30% more for pre-sale than you would for an already completed property.
Most pre-sale developments end up taking longer than expected. These delays can range from a few months up to 1-2 years. Regardless of whether the scheduling delays are caused by the developer or some external reason, there are usually clauses in the contract of sale which heavily favour the developer in these instances. This can make it difficult to plan a move-in date, and delay your own plans for your new property.
If a developer needs to make changes to the floor plan, materials or other design elements to comply with building codes they usually reserve the right to make these changes without notifying you. As such, the purchase you agree to in a showroom 3 years prior to the finished product can be different from the property you actually receive.
Your personal finances may change between signing the contract and the building’s completion. If you lose your job or something else impacts your income, you may not be able to access finance when the property is ready and lose your downpayment.
Delays in construction are common, and can be an inherent risk when purchasing a pre-sale condo
Can I Reduce My Tax by Purchasing Pre-Sale?
The property transfer tax (PTT) is one closing cost that often catches home buyers off-guard. It is based on the sale price of a property, at 1% of the first $200k, and a further 2% of the sale price from $200k-$2 million. As a first home-buyer, you may be entitled to a PTT concession, but only if the property is valued at less than $475,000, which isn’t very common in Metro Vancouver these days.
Purchasing a pre-sale property, however, can exempt the sale from the property transfer tax, provided the property is priced at $750,000 or less.
Whilst that is a win for the home-buyer, newly built properties are instead subject to 5% GST. This expense is usually in addition to the sale price of the property and should be accounted for when assessing your own finances.
If the property is to be used as your primary residence, there are opportunities to reduce your taxable capital gains in the future. However, this would be based on price appreciation, among other things.
How Do I Know I’m Purchasing the Right Pre-Sale Property?
Whilst there are never zero risks, there are a few things you can do to reduce the risks associated with a pre-sale property purchase:
Do your homework. Is the developer established and reputable? Do they have a good track record and happy clients? Is the property being built in an up and coming neighbourhood? Will there be access to services and other essentials? It’s important to look at the development as a whole and what it can offer you, not just the condo you wish to purchase.
Use a buyers agent! The best way to understand the property and neighbourhood is to use a licensed Realtor. They should be very aware of the area itself and new developments, including the positive and negative features of the development, and offer you industry-specific insights and advice.
In the same manner that you would assess the developer and development, choosing the right agent can make all the difference to your pre-sale property purchase in Vancouver.
It’s also important to keep in mind that a buyer’s agent does not cost you anything! Rather, a buyer’s agent is paid by the seller upon settlement of the property, so you have nothing to lose by letting the professionals help you.
If you’re interested in a pre-sale property, or another home purchase in Vancouver, the West Haven Group is here to help. Simply reach out to our professional team to schedule an obligation-free meeting.
One of the quieter neighbourhoods in Vancouver, the West End has recently become more popular thanks to its location and access to the city’s natural features. However, without a deeper understanding of the marketplace and the finer details of the buildings in the area, finding your dream home in Vancouver’s West End can be a challenge. We’re breaking down some of the key property insights so that you can call the West End home!
Neighbourhood Features: The West End
Known as the gateway to Stanley Park, the West End combines big city life with the great outdoors. The area encompasses the stunning English Bay Beach, the sea wall, Stanley Park, and other outdoor spaces, whilst bordering on some of the primary nightlife and shopping districts in the city.
Typically, residential property in the West End comprises 70’s and 80’s rental and leasehold buildings, and 80’s timber-framed strata buildings. The majority of listings are apartments, and with the city’s current sensitivity to losing affordable housing options, it is unlikely that these will be redeveloped in the near future. As such, condo owners and strata bodies have been contributing to renovations and facelifts, building new life into buildings that sit on (arguably) some of the best land in Vancouver.
Whilst these properties are unlikely to change significantly, infill projects and other luxury towers are becoming more prevalent. This is creating more options for dining, retail and other amenities, and modernising the area, whilst allowing it to maintain its existing character and laid back demeanour.
With a wide variety of building types, finding your dream home isn’t a matter of where it’s a matter of when. And whilst property is generally more affordable in the West End compared to Yaletown or Coal Harbour, there are a number of considerations that can help you to find the perfect home.
Inside the West End- Past, Present and Future
To give you some insight into the properties of Vancouver’s West End, we’re looking at the current properties available, as well as future plans for the neighbourhood.
The Buildings in Vancouver’s West End
1. A lot of the buildings in the West End are leasehold properties. Leasehold means you own the house/condo/townhouse but not the land that it sits on. Generally, this land has been leased to a developer, who builds on it and leases the property for a stipulated sum of money and amount of years.
Whilst these leases are long term, it can make it more difficult to obtain financing if purchasing a leasehold property. This is because you are purchasing the right to possess the property until the end of the lease, or you sell it to someone else. In the West End, most of the concrete towers are either rental buildings or leasehold, and most of the leasehold buildings have pre-paid leases that come due in 2073.
2. Because of the access to finance (among other things) strata titled properties are much more sought after, and market data indicates that for 2020, properties only spend between 10-15 days on the market before they’re sold. This is important to know, as hesitating on a property you like could mean missing out.
3. If you’re looking to move into one of the Strata wood-frame builds, try to find the buildings that have had renovations or updates already performed. Things like new rain-screens, pipes, windows etc… when this maintenance has been done, it indicates a more sought-after building in better condition.
4. Most of the 1970’s buildings in the West End have shared laundry facilities. Whilst this may not bother some, most residents prefer to have their own internal laundry. The slightly newer buildings (1980s and onward) will typically have in-suite laundries, and may be better suited to your property search. Similarly, buildings that have been re-plumbed since their construction may also allow for a ventless laundry to be installed after purchase.
Where in the West End Should I Live?
When it comes to where in the West End you want to live, there are a few things to note:
5. West of Denman has become its own micro-bubble, know for it’s quiet and laidback community, and one of the most convenient access points to Stanley Park. Denman itself, however, has been going through a facelift, with newer and more modern retail options entering the area.
6. Most people aim to be as close to the water as possible, but really anywhere in the West End makes it a short walk.
7. The City has been supportive of new rental towers within the West End in zones where new strata towers would not be allowed. The benefit is that these towers so far are turning out to be quite well done, and are modernising these zones. One complex in particular has resulting in a brand new Safeway grocery store, and other commercial developments could lead to increased amenities in the area. Being aware of new developments in the area may help you choose where in the West End you would like to live.
The Future of The West End
8. New, luxury and ultra-luxury towers are already being built along Davie, Thurlow, Burrard and Alberni. These areas have been designated for high rise, so expect other residential and commercial developments along these streets in the years to come.
9. Various infill projects are resulting in brand new boutique strata developments that are offering some unique new homes. However, parking can be difficult to come by with some of these homes given that they are sometimes too small or too constrained in some way to build an underground parkade. As infill projects, they also tend to add congestion to an area, and this may be a consideration for your property hunt.
10. Alberni will become Vancouver’s most architecturally interesting street – with stunning ultra-luxury towers underway. Prices within these towers are among the city’s most expensive at over $2,000/sqft. For more information about these developments, and the possibility of a pre-sale, please get in touch with us.
At the West Haven group, our dedicated team is on the ground to help you find your dream property. If you would like to see what’s available in your favourite area, or need help selling your property, we’re here to help.
For many of us, the dream of a big family home is enough motivation to get out of bed every morning. But after the family leaves the nest, it’s not uncommon to find yourself with too much space and an ever-increasing list of costs and maintenance. Downsizing in Vancouver can be the perfect solution, giving you back the time and money to enjoy your new home, and it’s location.
Why Downsizing in Vancouver Can Be the Right Move
There are a lot of reasons that people choose to downsize their properties in Vancouver. Being able to reduce your living and maintenance costs and unlocking capital in your property to name a few. But more typically, we see people looking to downsize when their children have left home, or in a move to a different neighbourhood to be closer to amenities and other lifestyle benefits.
Downsizing could also be the right choice for you if you travel a lot for work, or are looking to travel more permanently. Rather than paying expensive utility bills and property taxes for rooms that aren’t being used, moving into a smaller property or condo may free up some much-needed capital, as well.
As the boomer generation continues to exit the workforce, we most often see retirees looking to downsize in Vancouver. Considerations like comfort, the difficulty of living in multi-storey housing as you age, and being closer to family and friends are all reasons to consider downsizing. But other unforeseen events such as relationship breakdowns, employment circumstances, or global pandemics can also become aggravating factors.
Make Downsizing Easy With These 5 Steps
1. Define Your Goals
Before you can downsize, you need to determine the necessities, and which things you are happy to compromise on. Room is a given, but you need to consider things like:
how much room do you actually need to live comfortably?
Do you need a guest room or can you sacrifice it to minimise costs?
Which neighbourhoods would you be happy to live in?
How long do you plan to live there? Will stairs become an issue?
Are you trying to avoid maintenance?
All of these questions and more will help you to make decisions on the type and size of property that suits your needs.
2. Buy or Sell
When it comes to property, the decision to buy or sell first comes down to personal circumstances. There are a number of factors that come into play, such as:
the current state of the market
The specific properties involved. Are they unique? Will they be an ‘easy’ sell?
The risks involved with either option
Flexibility with your time, finances or options
For more information, see our detailed write-up. Using an experienced realtor can help to streamline this process for you, and give you advice specific to your circumstances.
Then it’s time to make some tough decisions.
3. Pack and Sort
Downsizing in Vancouver can mean a much smaller space than you’re used to. You’ll need to decide which pieces of furniture you might donate, which items you consider essential and which ones you do not. In short, what are you taking, and what are you saying goodbye to?
It can be an emotional process, and we suggest starting as early as possible. Some people prefer to start in unemotional rooms, like the laundry or garage, before moving into the main parts of the home.
When you begin to pack, it’s important to consider whether the items you’re keeping serve your plan for the new property and its uses. Does it help you meet your goals? Have they actually been used recently? In many cases, a lot of possessions can be passed down to family or friends, who can enjoy them as much as you did.
4. Call in the Favours
Moving day means all hands on deck. Depending on your circumstances you may be able to rely on friends and family, or paying for a moving company may suit you better. Either way, it can be an emotional and stressful experience, so remember to breathe, and take your time.
5. Acclimatise
Spend time in your new property, arrange and re-arrange. But don’t forget to enjoy all the great things about moving to a new place! Get outdoors and explore, get to know the street names and how to find your way, meet the neighbours. Often it lets you appreciate a neighbourhood while you get to know it, and it’s a great way to find it’s quirks and rhythm.
Thinking About Downsizing in Vancouver?
The process of buying or selling your home is a big task in and of itself. But downsizing has a more specific set of challenges that can make it a difficult process. At the West Haven Group, our dedicated team can assist from start to finish. Whether it be determining your goals or helping you to sell or find your new dream property, we are always here for you.
To find out if now’s a good time to downsize, or for any other information, please reach out and connect!
