Defending Vancouver Condo Assignment Sales

from Ozzie Jurock's Insider Newsletter
September, 2007

The condominium assignment market in Vancouver has been roaring for five years, but cracks are beginning to show as overall strata sales start to slow. Assignments have always represented a leap of faith. A buyer is purchasing a home that does not yet exist at a price that is (usually) higher than what it was pre-sold for and hopes to resell it again at a higher price when it is actually built. Throw in escalating construction costs that have forced some developers to return deposits (to the original buyer) and fears that prices have already peaked, and you can see how some observers (yours truly included) are skeptical about assignment sales.

With one in four homebuyers opting to purchase a new build, the number of enquiries for the condo pre-sales, assignments and resales listed on the independent web site,, are increasing, founder Nicola Way says.

Jennifer Podmore, the usually bullish partner in MPC Market Intelligence (, which closely tracks the Metro Vancouver condominium market, reports that condo speculation, which largely relies on the assignment market, is fading. "We don’t see Realtors coming in with 30 or 40 pre-sale buyers any more," she said.

However, Nicola Way, owner of (604-781-9279; argues that the Vancouver assignment market is not only still strong, it is a smart way to buy real estate.

We give Ms. Way the floor:

Once seemingly a Realtor's domain, it did not take long for the general public to catch on to the potentially large profits to be made in assigning - or 'selling' - condos before they are even built. That intense interest, judging by the stream of enquiries to us at, shows no sign of abating - with around three out of every four assignments on our site, selling before their six-month listing period expires.

In the three years since forming, the change in who was getting on board with assignments was dramatic. Instead of the same group of Realtors listing their clients’ assignments mainly in Yaletown, there is now a far-wider range of different Realtors throughout the Lower Mainland. Those assignments are being bought both by investors here and abroad (mainly the U.K.) who know that, upon completion, the resale value of the unit should appreciate still further, but also by those purchasers who weren’t in a position to put down a deposit at the pre-sale stage but who really want to live in a particular development.

With the Urban Futures Institute predicting that the Lower Mainland population will increase by 65 percent between 2004 and 2044, demand for housing will continue. As long as there are new developments - which will continue as more land is made accessible - the phenomenon of assignments will carry on blossoming. Other factors playing a role in the popularity of assignments include high population migration, increasing incomes, strong economic growth and, in particular, overseas investment (Ed. note: Apparently … is a regular editorial feature in the British press) - all of which outweigh the effects of higher borrowing costs.

Key considerations in the success of an assignment are location, accessibility, amenities and the opportunity to own a brand-new apartment.

It is true that assignees (purchasers of assignments) must pay the assignor (the seller) the replacement of the deposit that the assignor paid to the developer (typically 25 percent of the purchase price) plus the ‘lift’ (or profit) in the price from original purchase price to new assignment price. However there are several ways that this payment can be negotiated with the assignor, including paying the deposit in full but leaving a percentage of the assignment lift to be paid upon closing.

It's simple supply and demand; as long as there is demand for condo housing, there will always be savvy pre-sale investors who buy to assign, sell upon completion, rent out - or actually move in.

Major Point:

MPC Intelligence reports that there were 257 more concrete condominiums on the Metro Vancouver market at mid-year 2007 compared to the same time in 2006, a 13% increase. Prices have continued to escalate at a rapid pace. Areas of Downtown Vancouver are now averaging over $1,000 price per square foot (ppsf) in Coal Harbour and $790 ppsf in Yaletown for new condominiums. In the inner suburban areas (Burnaby and Richmond) concrete condominiums now average over $500 ppsf, while in the Fraser Valley new concrete condominiums achieve over $430 ppsf.