Demand for land is up but prices are down as a wave of court-ordered sales creates a period of price discovery.
“A significant increase in distressed residential land properties for the first few months of 2025 is resetting new price floors, providing opportunities for developers to get back into the market,” said Casey Weeks, an executive vice-president with Colliers.
Weeks anticipates buyer opportunism linked to distressed assets will continue over the next 12 months as developers remain cautious and market fundamentals shift.
Data from real estate services firm Avison Young (Canada) Inc. indicates that 22 per cent of land sales over $5 million in the first quarter of 2025 were court-ordered, more than double a year earlier when when court-ordered sales represented 10 per cent of total land transactions.
The distress sales are happening across the Lower Mainland, in multiple submarkets.
Avison Young data indicates that residential and industrial, commercial and institutional (ICI) land sales have consistently represented at least a third of the region’s commercial real estate sales over $5 million, peaking in 2022 at 56 per cent of volume.
But this trend shifted sharply in the first quarter of 2025.
“Residential land sales made up only 19 per cent of total volume and ICI land contributed 10 per cent, a combined 29 per cent,” Shawna Rogowski, a senior manager of market intelligence at Avison Young, said.
This was above the previous low of 26 per cent share claimed in 2015, but points to overall caution relative to historical activity.
Since many who purchased land at premium prices are choosing not to sell unless absolutely necessary, Rogowski said buyers with immediate needs can still encounter high prices, even though the abundance of court-ordered opportunities has put downward pressure on prices.
Weeks said values have declined in many cases by 20 to 40 per cent or more.
A multitude of factors are contributing to the downward pressure, however, with Weeks calling out permitting and development fees as a top factor.
The combined effect of local and regional development cost charges (DCCs), provincial amenity cost charges and building permits, can be significantly greater than the value of the land.
Weeks pointed to a 1.4-acre, high-density site in Burnaby valued at $30 million, but the owner ended up paying $42.5 million in development fees.
“Upper levels of government need to take a hard look at this,” Weeks said. “Not enough homes will be built to catch up to the lack of supply.”
An absence of investors, spooked by economic turbulence, has further challenged developers’ pro formas, making it tough for them to secure financing and move projects forward. Softening rents have also made it difficult to justify fresh investment by both developers of purpose-built product and investors.
“Project execution has been challenging,” said Weeks’ partner Morgan Iannone, an executive vice-president with Colliers.
The Fraser Valley is an area where consumer confidence is very much in the spotlight.
“Volume of residential land transactions are down over 80 per cent for the past two years,” said Joe Varing, principal at Varing Marketing Group in Abbotsford. “There were 40 transactions that took place in 2022-2023 whereas from 2024-2025 there were less than 10 land transactions.”
Developers are focused on pre-sales to get existing projects moving forward rather than acquiring land for future projects, he explained. But cash flows aren’t pencilling out.
“Land today is a harder asset to finance as a developer because of the cost implications from municipal and city fees in Metro Vancouver and the revenues have come down,” said Varing.
The result is a squeeze on land pricing, with owners clinging to past notions of value as buyers offer significantly less than what they did three years ago.
Varing said land listings are building up on a weekly basis with lots of inventory for both entitled and unentitled land, yet it’s not selling as well as it should and he predicts the trend will continue for the rest of the year.
Varing would like to see some positive and progressive intervention from all three levels of government to remove red tape for entitled land.
“We do need some help from the government to get the consumer moving and buying … the end product because MLS has a significant amount of inventory and many existing projects and more projects being launched for 2025 are fighting for pre-sales,” said Varing.
Varing cites the example of a townhome that was selling for $1.1 million to $1.2 million for the finished product in Surrey and Langley but today it is selling for $900,000. Hikes to interest rates in 2022 kick-started the decline, but even with today’s lower prices there is little movement in terms of the volume of deals needed to hit the pre-sale target in order to finance new construction projects.
When it comes to single-family homes, Varing said there has been a slowdown during the last month across all residential product types.
As for Vancouver Island, the land market has been experiencing a lot of pressure in terms of pricing.
“Over the last year and a half to two years, the land market has reduced a lot with pricing. This is mainly a factor due to where interest rates were in terms of lending, construction and financing,” said Cordell Lloyd, associate vice-president with Cushman & Wakefield in Victoria.
When it comes to the six-storey wood-frame construction, the market is certainly feeling the pinch of updated B.C. building codes primarily due to seismic policy.
“For a six-storey wood-frame [project] it’s looking like anywhere from a 15 to 20 per cent increase on hard costs, so that is further going to put pressure on land pricing,” said Lloyd.
There haven’t been a ton of sales on the land side, Lloyd said; instead, there have been a lot of court-ordered sales and processes with groups that weren’t able to move forward with their projects because of these changes in the market since January 2024.
For developers who are purchasing some of the priciest land, the neighbourhood is a key attractive feature. Polygon Realty Ltd. just bought a high-profile site at the corner of Cambie and West 41st in the summer of 2024.
“We think with the rebuilding of Oakridge it is going to be a very special neighbourhood, with a lot of boutique retailers, convenient services and shops, and being right on the transit line; the Canada Line will be great for homeowners,” said Neil Chrystal, president and CEO of Polygon Homes.
Polygon plans a 31-storey tower with 185 condominiums, three levels of office, retail at grade and a daycare.
Chrystal added that people are looking to downsize and are finding it challenging to find something in their neighbourhood.
“We learned that there’s a lot of people that are living in older houses, big houses, nice houses, but now they are looking for a size that is comfortable in their vicinity and could consider moving down to, and that’s kind of who we like to build for,” said Chrystal.
