{"id":20531,"date":"2022-09-09T11:11:00","date_gmt":"2022-09-09T18:11:00","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=20531"},"modified":"2022-09-02T09:27:19","modified_gmt":"2022-09-02T16:27:19","slug":"new-construction-projects-launches-continue-sharp-rise-in-rates-may-have-spooked-some-buyers","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2022\/09\/new-construction-projects-launches-continue-sharp-rise-in-rates-may-have-spooked-some-buyers\/","title":{"rendered":"New-Construction Projects Launches Continue, Sharp Rise in Rates May Have Spooked Some Buyers"},"content":{"rendered":"<p style=\"text-align: justify;\">Project marketers say rate hikes are prompting a growing number of developers to halt or postpone the launch of residential projects until the rate environment stabilizes.<\/p>\n<p style=\"text-align: justify;\">\u201cMany of the developers who were gearing up for launches in the late summer, early fall, have decided to hold off,\u201d said Jacky Chan, president of project marketing firm BakerWest Real Estate Inc. in Vancouver. \u201cAnywhere from 50% to 75% of the active, on-the-go developments have been affected one way or another.\u201d<\/p>\n<p style=\"text-align: justify;\">The Bank of Canada\u2019s policy rate has increased by leaps and bounds since March, rising from 0.25% at the beginning of March to 2.5% today.<\/p>\n<p style=\"text-align: justify;\">With another rate hike in the cards for September 7, Chan says many developers are holding their breath. a 50-basis point hike would be tolerable, but anything greater would have significant ramifications.<\/p>\n<p style=\"text-align: justify;\">\u201cThey\u2019re waiting to see what happens September 7, and the magnitude,\u201d he said. \u201cIf this time it\u2019s more reasonable, then I feel a lot of developers will be more comfortable moving forward. But if it\u2019s even higher than [50 basis points], then people would really have to redo their numbers.\u201d<\/p>\n<p style=\"text-align: justify;\">This being said, Chan is confident that his firm will be able proceed later this year with the sales launch of Curv, a 60-storey tower planned by Montreal\u2019s Brivia Group on Nelson Street near Thurlow.<\/p>\n<p style=\"text-align: justify;\">\u201cEverything is still on schedule, and we have prepared for the changing of the market,\u201d he said.<\/p>\n<p style=\"text-align: justify;\">Earlier this year, Brivia chief investment and development officer Vincent Kou told Western Investor that he expected Curv construction costs to be 16% to 20% higher than conventional Vancouver luxury condo tower construction, which Altus Group pegged at $605 per square foot for 2022.<\/p>\n<p style=\"text-align: justify;\">Given land costs of approximately $3,900 a square foot, final Curv prices are on track to be double those of the most expensive new condo prices now being seen in Vancouver.<\/p>\n<p style=\"text-align: justify;\">Kou noted that construction on Curv won\u2019t start until pre-sales prove out demand for the units.<br \/>\nProjects are also preparing to launch outside the core.<\/p>\n<p style=\"text-align: justify;\">Jamie Squires, president of Fifth Avenue Real Estate Marketing Ltd. in Surrey, is preparing to launch the final phase of Aldergrove Town Centre this fall.<\/p>\n<p style=\"text-align: justify;\">\u201cThe interest has been pretty good \u2013 lots of inquiries,\u201d she said. \u201cWe\u2019re pretty confident that one is going to go well.\u201d<\/p>\n<p style=\"text-align: justify;\">While the sudden, sharp rise in interest rates may have complicated matters and spooked some buyers, she said presale purchasers are generally insulated from the immediate impacts of interest rate increases as buyers can lock in rates to give them certainty over what they\u2019ll be paying at completion.<\/p>\n<p style=\"text-align: justify;\">\u201cYou\u2019re pretty much protected and know what your costs are going to be at completion,\u201d she said.<\/p>\n<p style=\"text-align: justify;\">Regardless, she says interest rates remain at historical lows. The biggest issue with the increases is how they were handled.<\/p>\n<p style=\"text-align: justify;\">\u201cThe Bank of Canada sat on its butt all last year not doing its job, so had to rush and play catch-up this year,\u201d she said, saying a more gradual series of increases would have had a more limited impact on the market.<\/p>\n<p style=\"text-align: justify;\">\u201cWe probably wouldn\u2019t have even noticed and still be at the interest rate we are today,\u201d she said.<\/p>\n<p style=\"text-align: justify;\">It\u2019s not just consumer confidence that\u2019s been hit. Builders are also on edge, which in turn stands to limit new supply and keep housing prices high.<\/p>\n<p style=\"text-align: justify;\">\u201cJust trying to make the proforma work based on current revenues, current costs \u2013 I can\u2019t make any of it work,\u201d said Hani Lammam, vice-president, development and acquisitions with Cressey Development Corp. \u201cYou add another rate hike and it just puts the brakes on it. There\u2019s not much we can do.\u201d<\/p>\n<p><a href=\"https:\/\/biv.com\/article\/2022\/09\/rate-hikes-spook-market-condo-project-launches-continue\" target=\"_blank\" rel=\"noopener\">Rate Hikes Spook Market but Condo Project Launches Continue<\/a> by Peter Mitham | Western Investor | |BIV<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Project marketers say rate hikes are prompting a growing number of developers to halt or postpone the launch of residential projects until the rate environment stabilizes. \u201cMany of the developers &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2022\/09\/new-construction-projects-launches-continue-sharp-rise-in-rates-may-have-spooked-some-buyers\/\">read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[],"class_list":["post-20531","post","type-post","status-publish","format-standard","hentry","category-market-updates"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>New-Construction Projects Launches Continue, Sharp Rise in Rates May Have Spooked Some Buyers &#8226; Rory C Real Estate | Oakwyn Realty<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.roryc.ca\/blog\/2022\/09\/new-construction-projects-launches-continue-sharp-rise-in-rates-may-have-spooked-some-buyers\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"New-Construction Projects Launches Continue, Sharp Rise in Rates May Have Spooked Some Buyers &#8226; Rory C Real Estate | Oakwyn Realty\" \/>\n<meta name=\"twitter:description\" content=\"Project marketers say rate hikes are prompting a growing number of developers to halt or postpone the launch of residential projects until the rate environment stabilizes. \u201cMany of the developers &hellip; [read more]\" \/>\n<meta name=\"twitter:creator\" content=\"@RoryClipsham\" \/>\n<meta name=\"twitter:site\" content=\"@RoryClipsham\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Rory Clipsham\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/2022\\\/09\\\/new-construction-projects-launches-continue-sharp-rise-in-rates-may-have-spooked-some-buyers\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/2022\\\/09\\\/new-construction-projects-launches-continue-sharp-rise-in-rates-may-have-spooked-some-buyers\\\/\"},\"author\":{\"name\":\"Rory Clipsham\",\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/#\\\/schema\\\/person\\\/0672b9777e67473b9bd9247df49499c7\"},\"headline\":\"New-Construction Projects Launches Continue, Sharp Rise in Rates May Have Spooked Some Buyers\",\"datePublished\":\"2022-09-09T18:11:00+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/2022\\\/09\\\/new-construction-projects-launches-continue-sharp-rise-in-rates-may-have-spooked-some-buyers\\\/\"},\"wordCount\":635,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/#\\\/schema\\\/person\\\/0672b9777e67473b9bd9247df49499c7\"},\"articleSection\":[\"Market Updates\"],\"inLanguage\":\"en-CA\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/2022\\\/09\\\/new-construction-projects-launches-continue-sharp-rise-in-rates-may-have-spooked-some-buyers\\\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/2022\\\/09\\\/new-construction-projects-launches-continue-sharp-rise-in-rates-may-have-spooked-some-buyers\\\/\",\"url\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/2022\\\/09\\\/new-construction-projects-launches-continue-sharp-rise-in-rates-may-have-spooked-some-buyers\\\/\",\"name\":\"New-Construction Projects Launches Continue, Sharp Rise in Rates May Have Spooked Some Buyers &#8226; 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