Fraser Valley residential real estate

Key Take-Aways from the September Statistics

September sales figures are out from the Fraser Valley Real Estate Board, and while it’s nothing to write home about, the key metrics are curiously inconsistent, which could indicate balanced market conditions. For example, average days on market are up slightly, suggesting softening demand, but sale price as a percent of original list price is also up, suggesting healthy competition among home buyers.

Highlights from the September statistics include:

• Significant decreases in Benchmark Prices of detached homes and townhomes but condos held relatively flat.
• Large, albeit seasonally typical, increases in new listings of 15-31% depending on home type.
• A rise in average Days on Market, matching the 10-year average, which when combined with the increase in new listings, contributed to active listings ending the month 35% above the 10-year average.
• A 1.5% increase in townhome sales, month-over-month when detached homes and condo sales declined 8% and 13% respectively.
• In Benchmark Prices, South Surrey condos WAY outperformed the market with a 3.5% increase. Similarly, South Surrey townhome prices also outperformed, seeing only a 0.5% decrease compared to the Fraser Valley average decrease of 1.4%.

How the Fraser Valley land market is reacting

The Fraser Valley development land market woke up from its Summer nap with a marked increase in offer activity and inbound inquiries for development land, particularly in the latter half of the month. It is safe to attribute at least a portion of this increased activity to the return from Summer vacations but September’s string of good news (Bank of Canada rate cut, inflation falling to the target 2%, a US Fed rate cut and meaningful changes announced for mortgage rules) has the development community putting pen to paper again, with more optimism than we have seen in some time. Underwriting is cautious and extended deal terms continue to be the path to success in deal negotiations but there is action again. A welcomed shift following an anemic Summer lull.

The strongest demand is coming from developers and builders looking for medium-sized townhouse sites, for their lower risk profile and shorter overall project timelines. There is also a perception that future supply of townhomes will be limited in many core markets due to much of the townhome land becoming condo land at the hand of OCP updates or new transit-oriented area (TOA) legislation.

That, combined with a persistently difficult lending environment for land, has created an opportunity for better prices and terms for developers capable of making moves on the alternate segments of the land market like land with longer development timelines or sites of greater scale. There is simply far less competition chasing those categories of land.