When a real estate agent invited me for a tour of developer Boffo Development’s new luxury downtown project called Artemisia, I assumed the buyers would be the same foreign clients that are driving so much of Vancouver’s high-end market.
Not so, said agent Ben Amzaleg, who’s selling the remaining units of the 21-unit townhouse and condo project at 1102 Hornby Street. Three units are for sale, including two 1,800 sq. ft. townhouses for $1.6 million and $1.7 million, and a 2,500 sq. ft. penthouse for nearly $3-million. Another four units are also for sale, but they were purchased at the presale stage two years ago and are being re-sold by investor owners who’ve never lived there.
The buyers are overwhelmingly local mom-and-dad boomers and older who’ve cashed out of their west side homes to live in a flashy downtown pad. They are the generation that reaped the biggest rewards from Vancouver’s global real estate economy, the one that was the topic of a recent New Yorker piece that said Vancouver is the most expensive real estate city in North America. Eight per cent of the condos in Vancouver have an assessed value of more than $1-million, according to Bing Thom Architects urban planner Andy Yan. Of those, two per cent are assessed at more than $5-million. The majority of the luxury condos are clustered around Coal Harbour, Yaletown, False Creek North, Point Grey and Kitsilano.
As boomers age, they are downsizing in upscale fashion, taking their equity from a modest west-side home and splurging on a low-maintenance condo not far from what they know. The Artemisia homes are high end enough to include TV screens recessed inside bathroom mirrors, automated blinds, giant crystal chandeliers, and 30-foot cathedral ceilings.
“Two months ago I did a deal for a couple that lived in their house in West Vancouver for 30 years. He was still working as an academic. We ended up buying an 1,800 sq. ft. three bedroom in Olympic Village,” says listing agent Ben Amzaleg. “They were attracted to the views and the amenities and the fact she doesn’t need to drive so far anymore. They took all that equity from their house in West Van and put it into a condo.”
They are the new buyer demographic for luxury condos and they are unlike any that has come before. Unlike offshore buyers, they are not in it for an investment, but for the lifestyle.
They’re not seeking a cookie cutter 500 sq. ft. one bedroom for their kid to live in while they go to school, or to operate as a revolving-door rental until they sell it for a bit of a profit. This buyer wants the luxury of space, quality workmanship, top end appliances, centrality, surrounding amenities that are walkable, generous parking and storage.
“I’ve noticed in the last two years it’s the same exact story,” says Mr. Amzaleg, who specializes in luxury condos. “Onni is building right on the corner of Pacific and Richards, the Charleson. And the entire building starts at around 1,300 sq. ft. - all large homes. So no 500 sq. ft. one bedrooms or 850 sq. ft. two bedrooms. They are aiming for that specific older market.
“I think it was just the timing,” he adds. “In the next 10 or so years [boomer buyers] will be too old to go up the stairs, so they want to move. Don’t get me wrong. It’s very tough for them. A lot of them still have the objection of, ‘Where will I put my living room?’ because they are coming from very large spaces. So I’m dealing with a lot of objections over how to move a house into condo living. Even though it’s 1,500 sq. ft., it still doesn’t feel like enough for them. “But I think it’s a mental switch.”
Veteran broadcaster Red Robinson owned a 4,500 sq. ft. waterfront house in Deep Cove before he and his wife Carole downsized to a condo. With the kids grown and married off, they didn’t need the space or the hassle of living outside downtown. They initially rented a Coal Harbour condo to give it a try, but found it isolating. So they purchased a condo at the foot of Hornby Street with a waterfront view, and with several friends already in the building.
“We didn’t have that sense of community in Coal Harbour,” says Mr. Robinson. “Now, we’re in Yaletown and there are more lights burning in the windows at night. Our building is 10 stories and solid as a rock. We’ve got 1,800 sq. ft. We needed space — I can’t live in an 800 sq. ft. joint.
“And we’re city folks. We love the city. We don’t want to live in Qualicum Beach like some of our friends. We couldn’t handle it. We go to the art gallery, the symphony and sports games. We want to be downtown and walk to these places.”
For an agent, this market means extra work. And for a developer, they mean extra risk, partly because they’re not as likely to buy into a presale.
“It’s a longer sales process,” says Mr. Amzaleg. “They do not buy a condo on the first go. They are going to come two, three, four, five times. They are going to circle the neighbourhood, because this is all new territory for them. So for developers it might not be as appealing as selling out a building in three months.
“Because they are all end users, the sales process is completely different. It’s way slower and they are way more picky on finishing options and small stuff.”
Bob Rennie spoke about the new market in his annual Urban Development Institute speech last week. He said people 55 and older have real estate equity in Greater Vancouver valued at $163.4 billion. That’s a gold mine for marketers, which is why there is a sudden flurry in the development of more spacious two and three bedroom condos instead of the usual cramped spaces.
Mr. Rennie says there’s even been a sudden switch in design at the Binning Tower at the University of B.C., in reaction to the new market. The project is in the presale stage, aimed at boomers in the area who will sell their houses for a few million. A luxury condo - as long as it’s large - will hopefully look like an affordable option. The downsizing market needs plenty of storage.
“At the Binning Tower at UBC, we can’t sell the one bedrooms, so we are amalgamating them into two bedrooms and three bedrooms,” says Mr. Rennie. “That $1.3- to $1.7-million is about space, luxury, big decks and great kitchens.”
One hurdle is the fact that most projects depend on presales for upfront financing. For a senior, or anyone else who is risk averse, the idea of making a home purchase before it’s built is unappealing. Only big developers with extremely deep pockets can afford the financial outlay of the “build it and they will come” approach.
But Mr. Rennie is more hopeful that the market will become more comfortable with presales.
“Banks won’t finance you without presales unless the developer is funding it himself, so there is risk,” he says. “But we are a presale city and I think these buyers have already become attuned to it.”
Mr. Rennie agrees it’s a buyer demographic that calls for a different way of doing business. They will take their time, peruse their options, seek out the best value and maybe research the developer. In other words, they aren’t an easy sell compared to the first-time buyer or the investor. This is about selling homes for settling down.
“The agents will do what I did when I started out,” says Mr. Rennie. “We sat in the White Spot and had coffee and a piece of pie and we talked with the client. Agents better get used to eating pie and drinking coffee.
“And they will need to get to know the clients’ names.”