UDI – Fraser Valley Outlook: A good place to call home
July 09, 2019
The Fraser Valley, according to three industry experts, is definitely a happenin’ place when it comes to real estate. That was the message delivered to a sold-out crowd at the Urban Development Institute’s (UDI) Fraser Valley Forecast luncheon on June 20. Bryan Yu, Central 1 Credit Union’s deputy chief economist and the first speaker, predicted interest rates will remain favourable through 2020, and may even drop over the short term — especially good news for first-time buyers. He also noted that price cycles occur regularly, and that BC’s economy has been leading the country for several years, growing at a rate twice the national average in 2017 — two further positives.
Eric Bond, principal market analyst at Canada Mortgage and Housing Corp. (CMHC), pointed out the Fraser Valley’s relative affordability, active lifestyle, and ever-increasing urban amenities continue to attract growing numbers across all demographics. In Langley alone, some 1,100 new households are forming each year. Next door in Surrey, this number is 4,000. And while this population may be cautious about purchasing a home, they all need somewhere to live.
Citing results of the Fall 2018 Homebuyer Motivation Survey, Bond said 74 per cent of recent homebuyers indicated their risk tolerance was low, yet 50 per cent said they spent more on their purchase than originally budgeted. Even more surprising, 55 per cent overall and 58 per cent of condo buyers also reported being in a bidding war — numbers not seen since 2017.
Scott Brown, president and CEO of Fifth Avenue Real Estate Marketing Ltd., saw no red flags in the Fraser Valley market, although there are a few yellow, caution lights. He stressed that our current sales cycle is not the same as it was in 2008, when unrelenting media coverage of Vancouver’s skyrocketing prices misled many homebuyers and investors into believing the same price escalation was happening across all neighbourhoods. Investors, he said, left the market for three or four years, but now they’ve returned with renewed enthusiasm.
However, increasing lack of supply, especially in new wood-frame townhomes, could put upward pressure on the bottom line. “In North Delta and Whalley, there is not a single, new wood-frame townhouse available. In South Surrey, Central Surrey, and Langley, there’s virtually nothing, although some are anticipated in Langley.”
Proposed new SkyTrain and rapid transit infrastructure will have a big impact in these areas as people realize the convenience of commuting options.
Brown, like many other industry insiders, is bullish on Abbotsford. He believes new-to-market developers and incumbents will continue to seize opportunities in this still “relatively affordable” area outside of central Vancouver, and consumers who are increasingly willing to re-locate/migrate east will continue driving this growth — growth that will soon be pushed even farther up the Valley. “In three to four years, we’ll be talking about new development in Mission.”
His best guesses for the future? “Absorption will accelerate in 2020 while prices will remain relatively stable. However, major price escalation in Metro Vancouver over the next three to five years will put further pressure on demand and supply levels in the Fraser Valley and could result in higher prices.”
In closing, Brown said he’s cautiously hopeful the current stress test may be relaxed or redesigned in some way, something he believes is a necessity, however there will likely still be many buyers who remain squeezed out of the market. “Affordability will continue to be challenging until we can work together and treat it as a genuine crisis versus a political sound bite. People who are marginally happy don’t say much; people who are unhappy say lots. We need to get active and make affordability an election issue.”
For more information about UDI and BC’s development industry, visit udi.bc.ca.