The Latest News From the Fraser Valley Real Estate Market

I'm back with an update on the real estate market for the Fraser Valley.

What's been going on here in the Surrey real estate market? Recent trends in the market should give us a good idea of what we can expect moving toward the summer and beyond.

We saw 5,302 sales in May, which was a 21% increase from April. Compared to last year, it was the best month on record since last June when the market was one fire. It is also the second-best May we've seen in the history of our real estate board. That's good news.

Inventory is down by 9.5% in our market compared to this time last year. Looking at the new listings gives us an idea of how the market has replenished, and it was virtually the same as this time last year with 3,712. The average days on market—which tells us how quickly homes sell—is at 23, which is well below the historic average of 51 days. That's a sign of very strong demand here in our market.

So where is all this demand showing up? A lot of the stories we hear about high demand and multiple offers are happening in the apartment market. First-time homebuyers are creating much of this demand. Townhouses—which have become the new standard for younger families that can't afford a single-family home—also have high demand from people downsizing. 

We expect the strong demand to carry through the summer and well into August.

With detached homes, inventory is doing well in price points up to about $1 million. You actually see a slowness in the market when you get into the nicer neighborhoods with homes in the $1.5 million range, or the luxury market. This segment tends to be the slowest to recover from a market correction like the one we saw last fall.

This strong demand will carry into the summer, but remember, most buyers want to buy their house before August, which is traditionally the slowest month of the year. It's when they need to transition into the school year. Given the current momentum, we actually expect strong sales activity going well into August. 

There will still be opportunities in the market, however. With the vacancy rate below 1%, we've seen renters struggle to find a place. This has not only driven up rental rates, but also demand for multi-family rental units. This is where investors seemed to be focused right now. 

If you or anyone you know is considering buying or selling a home in our market, give me a call or send me an email soon. I'd be glad to help!

What Our Real Estate Numbers Tell Us About the Market

What do our market numbers tell us about what we can expect to see in real estate this year? I’ll go over those numbers and answer that today.

What can the latest numbers tell us about our real estate market?

There were 2,230 sales in the month of April, which is a very strong performance of the market. In fact, last April only saw 2,213 sales. Of those 2,230 sales, 438 were apartments, 567 were townhomes, and 1,225 were detached homes. As far as prices go, we saw a 5% increase in detached homes compared to last fall. 

There were 4,913 active listings in April, down 13% from last year, which made it the lowest inventory for April in 10 years. 2,950 new listings came on the market compared to 3,942 last April. That means new listings were down 25%. 

Buyers have fewer options and as a result, their offers are higher. Over the past year, detached home prices rose 14.5% to $888,900, townhome prices rose 26% to $446,000 and apartment prices rose 29% to $285,400. So what’s influencing the market?

Unfortunately, the production of multi-family homes is lagging.

First, we’ve got a lot of first-time homebuyers taking advantage of new government down payment options. Then we’ve got people who are downsizing. Unfortunately, the production of multi-family homes is lagging. We probably won’t see production start to catch up until later in the year. 

If you’re a buyer in our market, you need to be really well prepared with your financing and well represented when you negotiate on a home in case it turns into a multiple offer situation. 

As a seller, you want to make sure that you’re getting the right price for the product that you have. You also need to make sure you are represented by the right agent to ensure your home sale goes successfully. 

If you or anyone you know is planning on purchasing or selling a home, feel free to give me a call or send me an email. I’m happy to answer any of your questions.

What's in Store for the Spring Market?

Looking at the market's numbers from March always provides a good idea of what we can expect from the Spring market.

Taking a look at the market from March always gives us a good idea of what will happen in the Surrey spring market. The good news is that March was an extraordinary month!

In fact, it was the second-best sales month in the last decade with 2,213 sales. Townhome sales made up 638 sales and apartments made up 526. Basically, attached housing made up about half of everything that sold over the month. That's a lot of demand for that type of home, much of which is fueled by the first-time homebuyer program brought in by the government.

As a result of this kind of absorption rate, what can we expect? Well, looking at the inventory levels in March, we can see that we peaked at 808 homes, which is fairly low compared to previous years. With supply this low and demand this high, prices will move up.

With supply this low and demand this high, prices will move up.

In March, attached housing prices continued to rise from more than 5% from January. With detached housing, there has been a rebound after last year's bad news in the wake of the market correction. 

This all tells us that consumer demand in the housing market is clearly very strong right now, suggesting that we're in an inflationary environment for the year. This should keep sellers very alert that if you plan to sell in this market, you need to work with a great agent to get the right price for your house and to make sure you know where you're moving and that you have enough time for that purchase. 

If you're buying a home, it's vital to have your financing prepared to capture the opportunity. We're now seeing a lot more time required from lending institutions to get these deals approved, so buyers need to be ready to write an offer when their agent finds a home. 

If you or anyone you know is thinking about making a move this season, we'd love to help you. Just give us a call at 604-908-0804 or send us an email, we're always here to help!

Which Events Had the Biggest Impact Our Real Estate Market?

Today I wanted to give you a quick look at what happened in 2016 in our real estate market and how some major events affected pricing and opportunities.

The first big event was this summer when the federal government said that foreign non-national buyers would pay an additional 15% on property transfer tax. On the high end of the market, this pulled back demand significantly and immediately.

Then, in October, the Bank of Canada levied a change of policy that requires buyers to qualify under a five-year rate. This effectively reduced affordability by 20% or more for most buyers. Of course, this pulled back demand on the lower end.

So how resilient was the market to these events and the overall uncertainty with the election issues all the other sentiments of the market?

If we look at the median price for detached homes a year ago versus where it's at now, it went from $700,000 to $785,000. That's a 21% increase. The townhouse median price went up from $354,000 to $462,00, a 31% increase. Finally, apartments are up from a $211,000 median price a year ago to $249,700, which was an 18% increase.

Why did townhouse prices do so well? We can likely point to affordability since a lot more buyers were pressed into that product type. What do these numbers mean for opportunities? For buyers, when inventory rises and demand gets pulled back, we see more favorable pricing and more options.

It's also great news for sellers because a year ago, many of them couldn’t move up market because there was so little inventory to choose from. Now, they have far more options and they don't have inflation working against them.

In short, there are good opportunities for everybody coming up, and it looks like the market has been very resilient. If you or anyone you know is planning on making a move, give me a call or send me an email. I'd be honored to work with you. Merry Christmas to you and your family!

What the Numbers Tell us About the Current Market

What are the numbers saying about the real estate market here in Surrey?

We’re currently looking at 5,565 homes listed on the MLS. In the last month, we saw 1,245 of them sell; those homes were then replaced by 2,245 new homes. That left us with 22% of all homes being sold. 

If you compare this activity to the previous 30 days, when 29% of all homes sold, you can see that the sales-to-list ratio is beginning to drop. What does that tell us?

That tells us that the anticipated impact of the foreign buyer transfer tax is already starting to put gravity on prices. We’ve seen foreign buyers pull to the sidelines in many cases, and now a new phenomenon has been introduced into the market, of which we have yet to see the full impact of. What I’m referring to, of course, is the new mortgage qualification criteria that was introduced at the beginning of October. 

This new criteria specifically affects first-time buyers. How? Prior to this legislation being enacted, a buyer who could previously qualify for a $700,000 mortgage can now only afford a $550,000 mortgage because their purchasing power has been reduced under the new five-year rule. As a result of this, the demand will likely decrease overall in the market.

Inventory is rising and demand is dropping.

With inventory rising and demand dropping, prices will likely also drop slightly. Fortunately, because we have good fundamentals supporting the conditions of the market, we can better accept the fact that the market has changed from where it was in the spring and summer.  

If you or someone you know is planning to buy or sell property, I invite you to give me a call or send me an email. I look forward to helping you! 

How the New Transfer Tax Amendment Affects You

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How does the new 15% transfer tax amendment on the purchase of residential real estate in the Vancouver region affect you?

As we know, there is already currently a property transfer tax amendment surcharge on the purchase of residential real estate. It is 1% on the first $200,000 and 2% on any balance above that until the price hits $2 million, in which case the surcharge increases to 3%.

The introduction of this additional 15% tax surcharge for the purchase of property, however, applies only to non-residents. In the luxury arena - where most of these people are active - this represents only about a 5% component of all transactions. Of course, if you go into the mid-range market, it represents an almost negligible figure of the overall transaction. Remember - this only applies to the residential purchases; it does not apply to commercial transactions or agricultural land. The implementation is also only enforced in the greater Vancouver area, where the majority of market activity occurs.

"Markets have a funny way of becoming the stories people tell about them"

As an example, if a foreign buyer purchases a $2 million property that closes before August 2nd, their current transfer tax payable would be $38,000. This, of course, translates as a total purchase cost of $2,038,000. If that same $2 million transaction closes after August 2nd, the buyer would incur the installation of the 15% transfer tax. In this case, that 15% amounts to $300,000. So, in addition to the $38,000, the total transaction cost amounts to $2,338,000.

Our question becomes, then, how does this translate to the greater market? Consider this - with only 5% of the buyers impacted by this new tax, it shouldn’t make too much of a difference, right? Possibly, but markets have a funny way of becoming the stories people tell about them, so even on a sentimental basis we can see how some buyers may refrain from buying until this news filters through the market. They may wait by the sidelines and hope the prices start tilting their way. At the same time, we might see sellers panic and react by dropping their prices in the hopes of snagging a buyer.

Overall, it’s clear that this tax news will favor buyers over sellers. If you have any more questions about this, shoot me an email or give me a call at (604)-541-4888. Thanks for your time.

A Look at what the Surrey Market Numbers Say About the Future

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Let’s take a look at where the market is at and where it’s going based on what the numbers are telling us. We can see that in June, 51% of all available inventory in Surrey sold. We’d call that a seller’s market.

If we contrast that with a year ago when only 26% of available homes sold, we can see that what we call the absorption rate actually doubled. For buyers, that means far fewer choices, and for sellers, it means getting prices that were very strong.

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Compared to just a year ago, the average sales price has jumped 23%

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When looking at the questions of whether or not it’s going to continue, we just have to look at the overall picture of where prices have gone in the last year. Looking at this June, we see that the average price was $703,207. Looking back to June of last year, this figure was $571,595. Average prices for the same home are 23% higher, and in some cases, much more.

This is because a lot of buyers who could have afforded a single-family home a year or two ago can now maybe only afford a townhome.

If we look at where the real winners in the market are going to be, we can see that townhomes are doing well because there’s a lot of demand for them. We can also see that because of interest rates being five-year rates at 2.25% a lot more buyers will enter the market.

If we’re looking at what’s going to happen in the summertime - generally between mid-July and August - many home buyers have purchased and are now in moving time. We can see beyond that that we do not have enough inventory to level out demand, so prices will continue in the upward trend.

If you or someone you know is looking to move in the market, I invite you to give me a call. I look forward to hearing from you soon!