Surrey developer pauses 1,000 homes, says prices can’t drop any lower and suggests a condo ‘bailout’ is needed

The Metro Vancouver condo market has been “killed” by a number of factors, and relief akin to a government “bailout” is needed because prices for new units can’t drop any lower, says one of Surrey’s largest developers.

But before you grab the pitchforks and torches, Jonathan Meads – vice-president of developments for StreetSide – wants you to hear him out.

Meads says the situation is dire for the housing market – so dire that StreetSide has “parked” its plan to build more than 1,000 condos on 96^th Avenue in North Surrey until market conditions improve and/or various levels of government reduce fees and charges that added an estimated $22 million to the project was going to roll out over about 10 years.

“There’s a limit to how much you can lower prices,” Meads told the Surrey Citizen. “We’ve reduced prices as much as we can … We have to find ways to reduce the cost of building a home.”

The comments come at a time when there are more than 2,500 unsold condo units in Metro Vancouver, with most of those being newly built condos.

New condos are languishing because investor buyers have abandoned the local market, going from more than 50 per cent of the identified buyers in 2023 to just seven per cent. Part of the blame has been placed on a ban of foreign investment in the condo market, drying up investment money.

“The investment buyer has completely disappeared from the market,” Meads said.

The loss of those buyers means developers don’t receive enough pre-sales to fund new projects, which means many projects are on hold, or pivoting to rentals.

Andy Yan, director of the City Program at SFU, says the buyers who remain, which include young first-time buyers, aren’t necessarily interested in condos aimed at investors due to the tiny size of those units.

“Basically it’s a stalemate between developers and buyers waiting for prices to drop,” Yan said.

Meads said developers face a variety of factors they can’t control that drive up the cost of building:

• Fixed land prices
• World economy
• Supplies and materials impacted by U.S. tariff hikes

Developers also find it more difficult to borrow money for projects is prices drop to the point where a project isn’t financially viable, Meads said.

“Consumer confidence has disappeared,” said Meads, adding that provincial government “rhetoric” hasn’t helped.

So with revenues dropping due to moderate price drops, developers must find other ways to cut costs, Meads said.

That leaves fees and taxes from cities, Metro Vancouver, the province and the feds, with Meads saying those add at least 20 per cent to the cost of a condo project, and can add up to 30 per cent – meaning as much as $300,000 of the cost of a $1 million condo unit are fees and taxes.

“We need to shift the areas that can move. That’s something that can move – governments can lower those charges,” said Meads, adding that those can be passed onto the consumers to kickstart the market.

If the market stays stagnant, it impacts as many as 20,000 jobs, from construction workers to suppliers to consultants to planners, said Meads.

Which is where Meads gets the term “bailout” from.

“If the auto sector went to the federal government and said we’re going to lose 20,000 jobs, there would be a bailout tomorrow,” Meads said.

“And I’m not saying come and bail out StreetSide or bail out X development company. What I am saying is use the equivalent bailout money to reduce DCCs (development cost charges).”

Yan wonders how popular such a plan would be with the general public, adding that there would be several issues to be sorted out, including the transparency of examining how the developers operate and what outcomes would be attached to any money coming from government.

“Developers need to be accountable for the business decisions they’ve made up until this point,” Yan said.

WHAT’S NEXT

Meads said some sort of announcement on fees and charges is expected from government on Nov. 4.

Meads said StreetSide’s North Surrey project was hit by more than $22 million in fees, mostly from the regional government called Metro Vancouver. But some of the charges came from the City of Surrey.

Since StreetSide announced it has put on hold its 96^th Avenue project, Surrey has “reached out” and Meads met with city staff last week.

“I credit the city for doing that,” Meads said.

What’s at stake if construction doesn’t get moving again is a loss of jobs to Alberta. Meads said StreetSide has a good group of tradespeople they don’t want to lose.

The provincial government has also set ambitious housing targets of more than 125,000 new homes over a 10-year period. Meads said that after five years, less than a quarter of that goal has been met.

And now, new projects are stagnating but the province is still pushing cities to hit their housing targets.

“The longer we leave this, the longer the gap in housing production,” Meads said. “Our industry is a bit of an oil tanker – it doesn’t turn around very quickly.”

Many developers and housing companies are in “layoff mode” already.

“The sooner the levers are pulled, the sooner we can start building again,” Meads said.