Townhouses under construction in Langley’s Willoughby neighbourhood. (Matthew Claxton/Langley Advance Times)

Townhouses under construction in Langley’s Willoughby neighbourhood. (Matthew Claxton/Langley Advance Times)

Langley sees 123 ‘assignment sale’ home flips in first quarter of 2022

Hundreds of homes under construction flipped before final sale in last several years

There were 123 Langley properties re-sold before they were even finished construction in the first three months of the year, according to provincial data that tracks assignment sales.

Assignment sales are the re-sale of condos or townhouses that have been pre-purchased before construction is finished.

Since the original buyer only has to put up the initial down payment for a strata property still under construction, it is relatively inexpensive. They can then wait and, at any time before the building is finished and the sale closes, they can “assign” the right to take possession of the home to a new buyer.

In some cases, assignment sales take place because the original buyer has to change their plans and can’t move in, but in many cases, it is done for the purpose of speculation.

The original buyer can benefit from an increase in housing prices between the pre-sale value and the market price of a condo or townhouse a year or two later.

Since until recently the price of housing has been shooting up dramatically, profits could be substantial.

According to the Finance Ministry, 123 properties were re-sold by assignment from January to March. There were 127 assignment sales, which means that up to four of those properties were flipped more than once before they were completed.

There were 353 people involved as assignors or assignees.

If those numbers hold steady over the rest of the year, it marks a decline in the number of assignment sales in Langley.

In 2021, there were 854 assignment sales on 822 properties in Langley, a 724 per cent increase in just three years.

However, the 127 sales from this January to March shows the practice remains common here.

In 2019, there were 103 assignment sales total in Langley, and in 2020, there were 177.

READ ALSO: Flipping of Langley pre-sale condos, townhouses rises 724 per cent in three years

READ ALSO: Housing sales still declining in Langley, prices dip

The Ministry of Finance requires the tracking of assignment sales.

Developers also have to agree to an assignment sale, and are often paid a fee for allowing it to go forward. Last year, developers in Langley collected more than $1.9 million in fees on assignment sales.

The impact of large amounts of assignment sales on overall prices is still unknown, said Andy Yan, director of the City Program at SFU.

“It certainly has a financial ‘floor’ effect,” he said.

The question is whether it has an inflationary effect on prices as well. But the government has only been collecting data on assignment sales for a relatively short period of time.

The other question is how much that demand influenced development.

“How many of these units are purely speculative, versus where people are comfortably living for the next five to 10 years?” Yan said.

He said the next six to nine months could reveal more. Prices in Langley rose faster than prices did in Vancouver over the past few years, and Yan noted that prices also fall faster in communities like Langley when the housing market turns.

However, he doesn’t expect a “pricing apocalypse.”

“Canadian mortgage debt is one of the most stable debts in the country,” he said.

The 2021 boom in assignment sales came during a year in which the real estate market, fuelled by record-low interest rates and a demand for more housing in suburbs such as Langley, saw prices driven to new heights.

In Langley, the benchmark price for a townhouse in January 2021 was $593,200, while condos were going for $406,100, according to the Fraser Valley Real Estate Board.

In December of 2021, the benchmark price for a townhouse was $771,200, and condos were $520,700.

Benchmark prices plateaued in Langley this spring, peaking in May before June saw price declines, mirroring national trends as interest rates rose.

Records of assignment sales don’t capture how much speculation is taking place in the local housing market, because they only cover homes that are flipped while still under construction. Single-family homes aren’t included at all, whether new or existing, and neither are existing condos and townhouses.

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