Is the Fraser Valley real estate market about to experience “fading momentum” and “some cooling” in the second half of 2021? After posting record gains over the last 15 months, including in May, it is widely anticipated that the housing sector in Fraser Valley and outside the Metro Vancouver area will begin to witness a decrease in sales activity and a slowdown in price growth.
While demand has not diminished, new housing inventories are popping up across Fraser Valley. In fact, homebuyers have witnessed a dramatic increase in new real estate supply this spring; welcome news in this competitive market.
Despite this easing of tight supply levels, valuations and transactions ballooned over the month of May in the Fraser Valley real estate market, suggesting that the momentum only seems to be growing stronger! Hardly the “cooling” that homebuyers hoped for.
Let’s take a peek at what happened to close out the typically busy spring real estate season.
What’s Going on in the Fraser Valley Real Estate Market?
According to the Fraser Valley Real Estate Board (FVREB), residential sales soared at an annualised rate of 267 per cent in May to 2,951. This represented the ninth consecutive month of gains and a record high for the month of May. Month-over-month, housing transactions slipped two per cent.
Fraser Valley real estate prices continued to balloon both year-over-year and month-over-month in May:
Single Family Detached: $1,323,300
- YoY: +33.6 per cent
- MoM: +2.3 per cent
- YoY: +20.7 per cent
- MoM: +2.7 per cent
Apartments / Condos: $488,500
- YoY: +12.6 per cent
- MoM: +2.0 per cent
The housing industry in the Fraser Valley has endured the same developments as other places in the province of British Columbia and across other Canadian real estate markets: limited supply and strong demand.
New residential listings in Fraser Valley advanced 78 per cent year-over-year to 3,926, while active listings tumbled nine per cent to 5,868. The average number of days it took to sell a single-family detached home was 14. Townhomes took 12 days, while apartments took 20 days to sell.
“Demand hasn’t changed. What’s changed is supply. In the last three months, buyers have 40 per cent more inventory to look at in the Fraser Valley and it’s allowed them to take back a little control,” said Larry Anderson, president of the FVREB, in a news release. “We’re seeing resistance to multiple offers and buyers adjusting their offers, or even waiting, because they have more selection. We’re a long way from a balanced market, but supply is helping us to head in the right direction.”
Could fresh housing stocks be coming to the region? In Chilliwack, the principal municipality in Fraser Valley, housing starts rose 122 in May, up from 98 at the same time a year ago, according to the Canada Mortgage and Housing Corporation (CMHC). In the first five months of 2021, housing starts have surged 651, more than double from 2020.
Vancouver Real Estate Fire Spreads Across British Columbia
Across British Columbia, housing markets are trending at levels unseen in many years. A substantial number of these places are indeed experiencing the same fundamentals of shrinking supplies and growing demand. But where is the demand coming from? Vancouver.
It turns out that the province’s real estate market is attracting homebuyers who were unable to tap into the Metro Vancouver area, whether it is because properties became too expensive or young families no longer wish to reside in an ultra-dense municipality (instead craving the larger living space found in suburban and rural properties). Whatever the reason is, households are setting homebuying sights upon communities outside Vancouver and the Greater Vancouver Area. From Okanagan Valley to Victoria to Fraser Valley, the entire British Columbia real estate sector has turned into an attractive alternative for Canadians attempting to turn their dreams of homeownership into a reality.
For example, an FVREB survey conducted between December 2020 and February 2021 found that nearly 13 per cent of recent homebuyers say they were originally from Vancouver. This is up from 9.16 per cent the same time the previous year.
“Anecdotally, what I’m hearing from my colleagues is, yes, not only are they seeing buyers move from Vancouver out to the Fraser Valley, but if they have listings in the valley, and [they have] multiple offers, they’re seeing a lot of those offers are coming from Vancouver realtors,” said Fraser Valley Real Estate Board (FVREB) president Chris Shields in an interview with Business in Vancouver.
But with reports that the Vancouver real estate market is beginning to slow down, with some properties selling below asking price, will this trend start to reverse as we approach the fall of 2021? Industry observers are keeping a close eye on homebuyer movement to better predict the fate of the Vancouver housing market.
For now, whichever ultra-hot BC housing market you’re navigating, make sure that you have a trusted, experienced REALTOR® by your side, because trust us, it’ll be a scorching summer for Canadian real estate!