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We have all seen claims like this but how exactly does Vancouver’s red-hot presale market work?
Adam & Matt are joined this week by Project Marketer Trevor Street, founder and CEO of The Partners Marketing Group, to break down this often-misunderstood segment of our market. Trevor lets us all behind the presale curtain, detailing how VIP access works, what you can do to land the unit of your dreams, market predictions for the coming year, and a whole lot more.
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Episode Summary
About Trevor:
Trevor is the principal of The Partners Marketing Group, which specializes in 21st century marketing to get multi-family, new developments sold in suburban areas. They don’t service places like Vancouver, Burnaby or Richmond, but focus instead on more challenging markets such as Langley, Maple Ridge and Port Coquitlam. He’s seen competitors use social media and online marketing on the side, but it’s their bread and butter. Trevor was licensed in 2005 as a realtor before getting into project marketing.
On why presales are so popular and what the media and general public gets wrong about the market:
If you’re buying a property, presales are the only real way to get a brand-new home. There is no standing inventory for actual completed new condos and townhomes. It’s the safest investment you’ll find, especially in suburban areas like Langley or Maple Ridge, because there is so much room for growth. If in, say, two years you decide it isn’t the right home anymore, between signing the contract and building, you’d be able to rent the property out and get good cash flow—it will cover itself.
On if the wave that pushed out from Vancouver and into suburban markets is still strong and growing:
The fundamentals are still there, and there’s still lots of room for growth. Their Chief Data Analyst pulled Canada’s immigration numbers. Trudeau’s target is 849 new people per day and this will only increase. They need to live somewhere, and Vancouver and Toronto are popular.
People chase affordability—Surrey, Tri-Cities, Maple Ridge—these are growth areas due to pricing.
Yes. They also target municipalities that are favorable to new development, for instance, Port Coquitlam, which made the best decision by doing an entire re-zone of the entire downtown. Official community plans are what determine what you can re-zone. However, even when building something in line with the plan, it still typically takes longer to get approved than to actually build the product. If a property has been blanket re-zoned, it’s much quicker: you just submit for a development permit. It usually takes 18 months or more off the process. Langley Township and Langley City are planning to develop a lot more, as well.
On why Trevor focuses on the tri-cities and suburbs of Vancouver:
Trevor grew up in Port Coquitlam and focuses in areas like this because when you run a newer company, you need to target the tougher areas. The suburban market may be brisk recently, but this wasn’t always the case. Trevor used to cold call rental buildings to promote presales, and did deposit layaway programs. When his company proved they could produce in certain areas, they got their foot in the door. His business has grown exponentially since then.
To bring those days back, there needs to be a large restructuring of the way the local government act works (outside of Vancouver). If you look at Port Coquitlam as an example, in every single step of the process – the mayor, council, planning, building, engineering, etc. – the people are fantastic. However, the local government act is structured in a way that is not conducive to building the supply we need. It’s based on old English law with many hearings and review—there’s just too much when a democratic, streamlined process could be followed to reform building processes and approvals.
On the typical buyer profile of tri-cities properties:
Young, first-time buyers. Trevor’s company tracks the algorithms online to see who’s clicking and registering for projects and what this costs per person in each city (this is a key benefit of using social media the way they do). They only advertise in the Lower Mainland and find it’s mostly local, end users that just want to get into the market.
However, they get mom and pop investors too; buying presale condos in suburban areas is a win-win. The rents are high enough to pay your carrying costs, even if the market changes. Now, you can get the same product in Vancouver for 50% more than in Port Coquitlam, but the rent is not anywhere near that. They say there’s a 1% vacancy rate, and Trevor definitely gets this feedback; rental properties are in huge demand. He’s personally investing further east to build a large portfolio (one property can’t subsidize another), like in Maple Ridge and Langley. All of his properties currently rented out are condos in Abbotsford—this is where he sees the cash flow.
On whether foreign buyers drive up prices and demand of the presale market:
Absolutely not. Premier Horgan has the right idea, as he’s moved away from the neat little box we want to pin the problem on. Last year, The Partners Marketing Group did 458 sales in and around the suburbs they target, and only 11 were non-residents. Immigration is adding a lot to our country and culture, but we need realistic policies to address the needs of the many people moving here.
On his advice to people looking to jump the presale queue and get a unit:
Make yourselves known to the people who are marketing the development (either directly or through your realtor). The biggest thing they do when sales start is try to hit the developers’ new construction target from their bank—they need to sell a certain number of presales as soon as possible to get the bank loans, and they’re paying thousands of dollars each month. Because of the real estate development marketing act, they’re required, by law, to give people a seven-day right of rescission (right to walk away). So, they try to lock in sales with those buyers they know are absolutely serious. Trevor has seen developments where 20-30% of sales rescind after only the first week.
On strategies to gauge whether people are serious:
There isn’t a specific way—Trevor’s head of sales looks at how much communication she has with people. They will first call people from appointments who know the most about the development and who seem the most serious. What also goes a long way is partnering with reputable realtors they know are familiar with new construction laws. They do email blasts with appointment invitations on a first-come, first-served basis. They do the best they can and there is a logical system in place.
Trevor is based in a resale office and he knows some of his competitors are burning bridges. This market will not last forever and the realtors helping them won’t forget, so when things go back to “normal” in however many years time, these realtors know they will be treated fairly when they bring their clients to The Partners Marketing Group sites. Trevor also feels he does a better job representing sellers—consumers remember them, too. He has been the subject of angry letters and phone calls, but feels we need to remember that the job of project marketers and realtors is not to be fair. Ethical, yes, but this is different than being fair. Their jobs are to represent their client’s interests at all times. As it’s private property they’re selling and they’re not discriminating against any group of citizens, they are not obligated to be fair. Housing supply is the core issue—in a balanced market, we wouldn’t feel this pinch.
On how he thinks the NDP’s housing policy will affect the presale market:
There will be special attention paid to the presale market—we’ve seen talk about speculation and “the wild west” of presales. Trevor thinks there’s a difference between understanding economics and understanding the market. The government doesn’t know what they don’t know and Trevor doubts they will speak to many experienced professionals and study how the market is working. Rather, it will be more of a populist, simplified, band-aid solution based on exchanging liberty (e.g. property or privacy rights, freedom of contract, etc.) for housing security. Trevor does not think they will address the fundamental issues that we’re seeing.
On predictions for the market in 2018:
Affordability will continue to be degraded. The world does business in US dollars and we are seeing a flourish in the American economy; as the gap grows between our dollar and theirs, we will see growth here. The idea that we will police foreign capital (something very untraceable), and it will be done by those who can’t keep drugs (something very traceable) out of prisons (the most secure buildings in the country), is insane. It’s not practical. The best thing to do is take measures regarding supply first, get back to a functioning market, and then look at what can be done.
Five-wire:
- Favorite neighbourhood in Vancouver: Gastown
- Favorite bar or restaurant in Vancouver: The Cambie (Trevor doesn’t get out to Vancouver often!)
- Downtown penthouse or west-side mansion: Downtown penthouse
- Where he first takes someone from out of town: The seawall (from Stanley Park)
- Platoon or Full Metal Jacket: Full Metal Jacket
To find out more about The Partners Marketing Group:
Visit www.thepartnersmarketinggroup.com.
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