Vancouver pre sale condos

Vancouver Pre Sale Condo Flipping Frenzy

Steve Saretsky -

Vancouver Pre Sale Condos- Sold OffShore, Flipped Locally

As the focus shifts from the single family market to condos the crunch to enter the market has never been more fierce. Bidding wars are ravaging anything that resembles four walls and a roof. To make matters worse, record supply under construction is being largely sold offshore. Similar to a Ponzi scheme, pre sale condos are sold to offshore investors who sometimes buy multiple units at a time and later assign or “flip” to local buyers at an even higher cost.

Here is the current number of assignment sales listed on the MLS.

Inventory of assignments
Inventory of assignments for sale on the MLS

This was exposed last summer by Kathy Tomlinson but in recent months has become even more glaring. Since the introduction of the foreign buyers tax, which has deflated the luxury house market, the attention has shifted to pre sale condos. Pre sale condos are exempt from the 15% foreign buyers tax, and have no doubt become a very attractive investment. Further, once assigned to a local buyer at a higher cost, it’s easy to avoid capital gains tax as nothing ever registers in land titles office.

It’s the perfect speculative system. Pay deposit increments of 5%, if the market tanks, one simply walks away from the 5, 10, or 15% worth of deposits. If the market continues to boom you flip it for an easy profit and dodge capital gains tax. Good luck tracking down an international buyer living in China, they are long gone.

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The Canadian Economy

Steve Saretsky -

Happy Monday Morning! We got a string of new data this past week confirming inflation in consumer goods, and housing are proving to be more than transitory. Canada’s consumer price index continued to drift higher with prices hitting an 18 year high, up 4.7% from last October. The recent floods in BC...

Steve Saretsky -

The calls for impending interest rate hikes continues. CIBC’s chief economist, Benjamin Tal, was out recently suggesting the Bank of Canada could hike its benchmark interest rate at least six times beginning in early 2022. “I think there is a risk of getting into the market at today’s rates,” noted Tal....

Steve Saretsky -

The BC Government announced it is looking at several cooling measures for the housing market in 2022. They have highlighted two measures. The first is an end to the blind bidding process, and the other is a mandatory “cooling off period” which will allow any buyer a 7 day recession...

Steve Saretsky -

The Bank of Canada continues to slowly drain liquidity after flooding the system with a firehose of cash during the pandemic. Bank of Canada governor Tiff Macklem announced the end of Canada’s QE program (also known as money printing). Furthermore, in Macklems words, “We expect to begin increasing our policy...

Steve Saretsky -

Consumer price inflation ripped higher in September, surging 4.4% year-over-year, the fastest pace of price increases in 18 years. Let’s discuss this further. We have an inflation problem and the Bank of Canada remains of the view that inflation will be transitory. Although they really can’t say otherwise, for if...

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The Saretsky Report. December 2022