Surrey has a glut of unsold newly-built condos as investors flee

An estimated five per cent of all the unsold newly built condos in Metro Vancouver are located in Surrey, according to the latest data from the Canada Mortgage and Housing Corporation.

And a large percentage of those unsold new condos are priced at more than $1 million.

The latest numbers say that about 3,200 condo units in the region remain unsold. That number rises to just under 5,000 when you add in houses, duplexes, and row houses.

Burnaby has the largest number of unsold units at 18 per cent, followed by Richmond at 30. Coquitlam has 12 per cent and Vancouver sits at 10 per cent.

Housing experts say that with a changing market, which includes a ban on foreign investment, the usual investors who buy presale condo units have vanished.

“Condominium starts fell sharply across the country as presales collapsed, investors pulled back and costs stayed high,” said the CMHC report. “These conditions made it hard for developers to reach the presale thresholds needed for financing, putting future condominium supply at risk, especially in Toronto and (Metro) Vancouver. … When completed units don’t sell, lenders restrict credit, and developers delay or cancel new projects because many rely on high presale thresholds to secure financing. This slows the pipeline of future housing supply.”

These unsold condo units are typically quite small, but still often selling for $1 million – something that regular folks can’t afford.

And so they sit empty, leaving developers paying heavy carrying charges and cancelling future projects due to a lack of working capital that comes with pre-sales.

“Yes, new product is inherently expensive because, well, it’s brand new,” said real estate agent Steve Saretsky. “Construction costs on concrete starts at $450/sq. ft. and that’s not including the land, taxes, and financing costs.”

What’s driving the housing supply right now is the rental construction market as many developers pivot.

“Rental construction drove overall new housing supply,” said the report. “The number of rental units under construction was almost twice the 10-year average. Increased rental supply resulted in meaningful increases in vacancy rates and generally slower rent growth.”

According to the B.C. government, rents in Metro Vancouver have fallen on a year-over-year basis for 29 consecutive months, with the average rent now 19.4 per cent lower than its September 2023 peak.

Rentals are also being built using public dollars in Surrey.

In Surrey, the province recently opened 60 units of rental housing at Bentley Place. And last year, Metro Vancouver opened 85 non-market rental units at Kingston Gardens.

The City of Surrey has also approved several projects, including the construction of 350 rental units on a 2.9-acre site of city-owned land in the South Westminster neighbourhood.

The CMHC report said that the missing middle was being addressed more and more in Metro Vancouver.

“Despite the broader decline in starts, missing middle construction strengthened. Ground‑oriented homes posted year‑over‑year gains, led by substantial growth in semi‑detached housing in Burnaby. Burnaby’s 2024 approval of laneway homes and secondary suites for semi‑detached dwellings contributed to this increase, helping diversify the region’s low‑rise housing stock.”