The residential home development market is surging across Canadian markets, there are more units under construction now than ever before in places like Toronto, Vancouver, Calgary, Edmonton and more. This boost in production is in response to well-documented demand for homes as both a lucrative investment as well as a place for people to actually live.
Unfortunately, some developers who are new to the industry (and some that are more experienced) find themselves with a glut of product because their rate of production has outstripped demand. This is true for new single-family homes as well as enormous multi-family developments, particularly in Alberta.
When you’re sitting on units that are ready to sell but aren’t moving, it’s not time to panic (yet).
Under Construction & Unsold
The rate of construction on new houses and condos has been gaining momentum over the last decade, and in many cases demand has kept up, but that trend may be changing in certain markets. Looking back to 2010, Edmonton had over 8,000 units under construction with about 1,400 unsold. Today, Edmonton is constructing homes at the same rate but there are twice the amount of units sitting empty and unsold.
Nearby, Calgary had just over 1,000 unsold units in 2010, but this inventory has doubled to just over 2,000 today. Meanwhile, construction levels have increased 25% from 2010 (from 6,900 up to 8,600 units).
Although construction levels have risen in Toronto and Vancouver, unsold units remain steady. Toronto had 44,000 units under construction in 2010 with only about 1,000 unsold. In 9 years, Toronto has nearly double the amount of units being built, but standing inventory has stayed constant at around 1,000.
In 2010, Vancouver had only 15,000 on the way with close to 3,500 units of unsold inventory. Today, Vancouver has three times as many units under construction. That’s 45,000 units that will need buyers in a matter of months.
Moving YOUR units. Not the others.
When the pressure builds for your sales team to start selling homes no matter what, the first inclination may be to offer big discounts and enticing incentives (like one developer giving away Teslas). This act of desperation will only get you in more trouble down the line because other builders can use this same tactic (driving down the overall price-point of units across markets), and your margins go down too.
The first step is to create interest in your product in whatever way you can – find what makes you different and shout it from the rooftops. In-depth market research will tell you who your audience is, where they are located, and what motivates them to buy. Once equipped with these insights, start building the marketing assets needed to reach and motivate your buyer group.
Traditional and digital advertising is a strong tactic for getting your message out but it may not be enough. In-community installations like mall popup events and festival sponsorships are more pointed ways of getting your brand name out there and remembered in a positive light. Of course, if your sales centre experience doesn’t excite and inspire buyers, actually closing the deal once they’re on-site becomes next to impossible. That’s why a striking show home parade is critical and can’t be the last consideration in your marketing. In short, give people a reason to visit you (a strong, trustworthy brand and message), then knock their socks off once you get them in the door.
Check out one of our sales centre experiences that set our client apart in an enormous way.