Free mortgage deal attracts buyers to Langley development despite condo glut

First-time homebuyers leaped at the chance to live mortgage-free for one year in response to a Langley developer’s offer to make their mortgage payments.

The savvy marketing move by Kerr Properties, the developers behind The Landing, 78 one- and two-bedroom condos in Langley, attracted several buyers before the promotion ended last week, development manager Travis Tournier said Friday.

“People really seemed to like it,” he said, adding “we hope to bring the promotion back in the future.”

Real estate analysts say creative purchasing incentives could become more popular as the Lower Mainland’s housing market begins to cool and prices come down.

Realtor and analyst Steve Saretsky said cities farther from Vancouver seem to be “cooling a little quicker” due to the one-two punch of a sales drop and inventory spike. Langley was the region’s strongest condo market just one year ago, with year-over-year price growth peaking at 51 per cent in December 2017. But in the months since, inventory has jumped 387 per cent and sales have declined.

Saretsky said the trend is concerning, although he cautioned the glut is exaggerated because 2017 saw inventory hit record lows.

“Some of last year’s demand was built on speculation,” he explained.

The trend seems to be hitting Abbotsford and communities farther east as well. In October, home sales plummeted 50 per cent year-over-year in the Fraser Valley, while prices also dropped.

A Canada Mortgage and Housing Association forecast released earlier this week said slowing population and employment growth have cut into housing demand in the region.

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But the developers behind The Landing remained optimistic.

While Tournier agreed that the market has “absolutely changed,” he expects it will impact pre-sales the most. Kerr’s project, which is six to eight months from completion, is seeing significant interest from first-time homebuyers who harbour no illusions about breaking into the Vancouver housing market, no matter how much it cools.

Saving for a down payment continues to be one of the biggest barriers for people starting out, and the developer’s offer of one year free mortgage has proven popular, he said. Buyers must put 10 per cent down, while the developer “matches” that with a cash-back payment of five per cent, which works out to about one year’s mortgage. At closing, the developer gives the buyer the five-per-cent payment allowing them to essentially live mortgage-free for one year.

Tournier said the idea was hatched when the developer realized many first-time buyers borrow money from their parents for their down payment. The cashback allows them to repay the debt quickly, making it a more effective incentive than simply reducing the condo’s price.

Units at The Landing range from just above $300,000 to under $500,000, with the average price falling around $400,000. A 10-per-cent down payment would be about $40,000, while the five-per-cent cashback would likely work out to about $20,000. According to an online mortgage calculator, the monthly mortgage payment for a $400,000 unit, less the down payment, would be about $1,862 with a 3.84-per-cent, three-year fixed-rate mortgage.

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